Platforms spend big on compliance

A number of platforms are continuing to struggle with Fee Disclosure Statements (FDS) as research finds that half of the funds spent on platform development in 2013 were used to remain compliant with regulatory changes. 

In its most recent Platform Report released today, Investment Trends stated that of the 13 platform providers reviewed, eight provided information on their development and regulatory compliance expenditure. 

This data showed that spending on new platform functionality was marginally higher than spending on regulatory compliance. 

Investment Trends stated that platforms have already addressed issues of functionality and pricing in the past, and despite the amount of funds dedicated to regulatory compliance platforms were still engaged in 'an arms race’ with each other. 

“Regulatory compliance has absorbed approximately half of platforms’ total development expenditure, but the platform functionality arms race has continued,” said Investment Trends senior analyst Recep Peker.  

“The level of development is reflective of the high level of competition in the industry. Platforms can very easily be overtaken by rivals if they do not keep innovating and meeting planners’ needs. 

“Platforms have been very responsive to planners’ needs. Common areas that development focused on at an industry level include enhancements to usability, adviser support, reporting, direct shares and corporate actions functionality, while building Fee Disclosure Statement functionality from scratch.” 

Investment Trends said work around FDS varied across the 25 platforms that were reviewed for the wider report, with some platforms waiting for the Future of Financial Advice (FOFA) reforms to be concluded before providing a finished FDS solution. 

The report said some platforms were providing basic information in Excel spreadsheets Most platforms were offering full functionality, with information tracking and FDS generation as standard.