FS13/2: Platforms - feedback to Chapter 4 of QCP 13/3

We are confirming the definition of ‘platform service’ following our consultation.

Why are we issuing this Feedback Statement?

A platform can generally be described as an online administration service with a single point of contact to the investment market for consumers or their advisers. We had made a correction to our definition of ‘platform service’ in our paper PS13/1[1] in April 2013, but said we would consult on this corrected definition to ensure there were no unintended consequences. So we consulted in our June quarterly CP[2] and are now confirming that we have not changed the definition of ‘platform service’ as a result.

Who is this aimed at?

This will affect execution-only firms which also arrange for safeguarding and administration of customers’ investments. Some consumers may be interested in the platform definition.

Feedback Statement FS13/2[3]

What are the next steps?

Some firms providing execution-only services (including wealth managers who provide an execution-only service as well as discretionary management services) are not clear whether they fall within the scope of the definition. Now we have confirmed the definition, we are contacting trade bodies and established platforms who deal with execution-only firms to prompt these firms to consider whether they fall within it. 

A firm that does will need to move from receiving payments from providers (including commission) to being paid only through platform charges agreed with clients – from April 2014 for new business and by April 2016 for legacy business.

Execution-only firms need to consider carefully whether they come within the scope of the definition. This will be necessary if they are arranging the safeguarding of investments belonging to their clients and their administration, which is part of the regulated activity of safeguarding and administering investments, even if they have not realised in the past that they need the permission for this activity. 

Want to find out more?

See our:

• Policy Statement PS11/9 (page 9)[4] where we explain why the definition should include these execution-only services.
• Our Perimeter Guidance Manual – PERG 2.7.9G[5] – explains that the activity of safeguarding and administering investments belonging to another is regulated, ‘as is providing a service under which a person undertakes to arrange on a continuing basis for others actually to carry out the safeguarding and administering’. And PERG 2.8.8G(2)[5] says that ‘ introductions to an authorised person …. are excluded from that aspect of this regulated activity which consists of arranging safeguarding and administration of assets by another person’. 

But firms should not assume they benefit from the exclusions without considering the services they actually provide to customers.  You can ask for individual guidance, in line with SUP 9 of the Supervision manual[6] but please note that we will expect you to have taken reasonable steps to research and analyse the issue before approaching us for individual guidance[7].