Consumer Panel to probe platforms' client record keeping

The Financial Services Consumer Panel (FSCP) is investigating platforms' recording of client transactions, following concerns consumers will be left with no investment history if providers go bust.

Rumours are rife the platform market is currently over-crowded and due for consolidation with some providers potentially in trouble as their regulatory burden intensifies. 

Michelle Cracknell, a former IFA and an associate director of consultancy firm Bluerock which recently conducted research for the FSCP, said the Panel is increasingly concerned if that happens platforms will not be able to provide clients with their investment history.

"The Panel is discussing whether platforms should have a legal requirement to keep users' information in an Escrow account.

"At the moment all changes are made online, which no future asset manager will know anything about," Cracknell said.

"What happens to a clients' investment history when a firm goes bust?"

Individuals have a legal responsibility to keep personal accounting records for seven years and Cracknell said the Panel is looking into whether platforms should be forced to adhere to a similar rule.

However, David Ferguson, managing director of Nucleus, said issues around record keeping are no different for a platform than for any other financial services firm.

"The key thing to ensure is that the back office database is robust. We are also obliged to send paper statements to clients twice a year."

The FSCP is an independent statutory body which was set up to represent consumers' interests in the development of policy for financial services regulation. It is an influential lobby to MPs and regulators.

Cracknell, an ex-director of regulated businesses at Skandia UK, said the Panel is also probing the transparency of platform tools and has concerns over disclosure practices.

The FSA has tried to implement rules on disclosure which allow it to avoid its responsibility to consumers, she said.

"The Panel is of the mind the FSA's disclosure regime has not worked to improve clients' understanding but has had the complete opposite reaction.

"The FSA just says to firms ‘you must disclose', so 50 page documents are sent out. A client may read five pages but they will not read 46.

"It is an abrogation of the FSA's responsibility and a disaster for consumers."

This week the FSA delayed its platform policy paper to Q3 as the regulator struggles to formulate its final rules.