Further consolidation in the direct to consumer platform sector is on the cards as providers struggle to find new business, according to investment consultancy Fundscape.

Fundscape data suggests the next ISA season will be as poor as this year’s, with flows hard to come by and intense competition for new customers.

Thanks to modest upturns in stock markets, assets actually crept back over the £300bn mark in the third quarter of this year.

Flows, however, disappointed with gross flows slumping to below £9bn and net flows dropping to a dismal £1.8bn — not their lowest ever, which was £1.5bn in the last quarter of 2022, but not far off.

Hargreaves and Interactive Investor (now part of Abrdn) remained the largest platforms by assets but the fastest growing platforms in the UK were Interactive Investor and Moneyfarm.

The acquisition of Profile Pensions boosted Moneyfarm’s assets while Interactive Investor’s multi-media advertising campaign continued to attract investors, the analysts said.

Martin Barnett, head of content at Fundscape,said: “In the short term, there is little likelihood of the headwinds abating and their impact on consumer finances and sentiment easing.”

The data showed that gross and net sales for the year to date were also lacklustre at £30bn and £9bn and unlikely to match 2022’s full-year figures of £37bn and £12bn respectively.

Fundscape said new customers and new money were much reduced, so platforms will have to work twice as hard to attract new customers.

Mr Barnett said: “In these straitened circumstances, poaching customers from each other becomes a necessity. Such a situation creates winners and losers, and we expect to see further M&A with any struggling players being snapped up.”