The FCA must examine Platforms’ tech because if it’s wrong it can have ‘huge’ effects, Seven Investment Management says.

The company has called for regulator chiefs to “look under the bonnet and assess how effective the technology is”.

This follows the FCA’s report this week outlining its terms of reference for its marks the start of its Investment Platforms Market Study.

Verona Smith, 7IM head of platform, said: “The FCA are right to seek clarity on the extent to which consumers are choosing platform services and products which reflect their preferences, but I would suggest they go a step further.

“It’s important to look under the bonnet and assess how effective the technology is and how that can be harnessed to help achieve a positive customer experience. Get the technology, and the service, right, and this can have a positive impact on customer outcomes. Get it wrong, and the effects can be huge.”

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Ms Smith said: “The meteoric rise of platforms have placed them at the cornerstone of the investment management industry – it’s the way we all invest, whether via advisers or direct. So it is absolutely right that the FCA puts platforms under the microscope. The focus on barriers to competition, commercial relationships and costs is absolutely crucial.

“But it is also important to remember that platforms are not just fund supermarkets – they are how investors experience financial services alongside their financial planner (if they have one) and not all platforms are offering the same services. Recognising these nuances, alongside the importance of good service, is crucial.”

She added: “We also welcome the FCA’s intention to look further at model portfolios, which are now quietly dominating adviser platform purchases. Many model portfolios have built up a performance track record that can now be properly compared and contrasted.”

Tom McPhail, head of policy at Hargreaves Lansdown, said: “The FCA has set a very broad scope for this study; the terms of what constitutes a platform can include online portals, life insurance companies, wealth managers and banks; in effect any organisation providing a retail investment service is likely to come under scrutiny.

“This study recognises the vital service platforms now provide to millions of people, helping them to save and invest for their future.

“The advice gap remains and platforms have an important role to play in delivering guidance and support to investors, many of whom need help if they are to invest with confidence.

“Platforms can also bring pressure to bear on asset management costs, negotiating discounts for investors, promoting good funds and highlighting poor performers.

“As with the asset management study, this paper is not simply about the price charged by retail investment service providers, it is about the value they deliver to investors.”