Quick guide to the platform crackdown

Q What’s an investment platform?
A It’s a “one stop shop” for an individual to hold their pension, shares and other investments in one place. Customers can invest through advised or execution-only platforms.

Q Sounds straightforward enough. What’s the FSA’s problem?
A The watchdog wants platforms to stop taking money from product providers, in exchange for offering their particular ISAs, funds or other products. The FSA would rather investors pay directly for services they want, rather than indirectly through less-than-transparent commission deals that can put the customer’s interests at odds with the provider.

Q Is this bad news for platform owners?
A They certainly put on a brave face yesterday. The likes of Hargreaves Lansdown said it only makes small sums of money from this rebate mechanism. But Deloitte thinks fund supermarkets make 75 per cent of revenues from such arrangements.