The Financial Services Authority (FSA) wants to ban providers from paying to have their products included on platforms, meaning investors would pay fees directly.
The rules would mean the end of cash rebates for investors, but the FSA said they will encourage competition.
“Investors are increasingly using platforms as a convenient ‘one stop shop’ for their investments, but at the moment many investors have no idea what they are paying for this service,” said FSA director of conduct policy Sheila Nicoll. The watchdog has opened a consultation and hopes to bring in new rules at the end of 2013.
Deloitte said in a report commissioned by the FSA that each firm in the £229bn platform industry will need to spend between £0.2m and £20m to implement the changes.
But while firms had lobbied the FSA to soften its plan to ban cash rebates, the industry claimed to be ready for the crackdown yesterday.
Hargreaves Lansdown, operator of one of the biggest platforms, said it was already making plans for a “no payments to platforms outcome”.
Charlotte Hill, head of financial regulation and compliance at law firm Stephenson Harwood, added: “There was a feeling in the market that this was coming. Rebates will come through additional investments rather than cash.”