The UK Financial Conduct Authority (FCA) today provided an update on work that it plans to either stop or postpone in light of the ongoing impact of coronavirus and economic conditions. These changes are set to allow the regulator to focus its resources on the most urgent work.

The FCA will stop its work on the platform exit fees consultation. Let’s recall that, the Investment Platforms Market study (2018/19) found that while the market works well overall, there were areas where it could work better. One of these areas was the barrier created by exit fees when consumers try to switch to a platform that better meets their needs.

The regulator announced in Policy Statement 19/29 that it would consult on restricting platform exit fees in the first quarter of 2020. However, this was delayed due to coronavirus, with an intention to consult in Spring 2021. The FCA has now decided to stop work on this consultation.

Since expressing its concerns in the 2018 Interim Report, there has been a marked shift in the market away from exit fees, with at least two major platforms announcing that they would no longer be charging exit fees. The FCA welcomes this approach by the investment platforms sector in phasing out the use of exit fees.

The Exit Fees Consultation was one of a number of remedies to address barriers to switching, including new rules to make moving platforms easier which have already been put in place and come into force in February 2021.

Although the FCA has decided to stop the exit fees work it will be closely monitoring the situation, with the potential to consult on new rules if market changes lead to harm re-emerging in this area.

Investment platforms are increasingly being used by consumers and financial advisers to access retail investment products and manage investments online. The Investment Platforms Market Study (IPMS) explored how investment platforms compete to win new customers and retain existing ones.

The Final Report was published in March this year. It found that, while competition was generally working well, some consumers and financial advisers experienced difficulties in shopping around and switching to a platform that better meets their needs. Consumers can find it difficult to switch due to the time, complexity and cost involved – driven in part by exit charges and difficulties switching between unit classes, the FCA said back then.