The Financial Conduct Authority (FCA) announced it is abandoning its consultation on investment platform exit fees due to the coronavirus and the direction of travel in the industry.
The regulator had already postponed the consultation to spring 2021, having initially intended to seek industry feedback in Q1 2020. That initial postponement was due to the coronavirus.
But on 13 November 2020, the FCA said it decided to stop work on the consultation.
“Since expressing our 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 watchdog said.
“The FCA welcomes the direction of travel by the investment platforms sector in phasing out the use of exit fees.”
Consumer harm still in focus
It said the consultation was one of a number of ways it was trying to reduce barriers to switching platforms with other measures coming into effect from February 2021.
The FCA added that it would continue to monitor the situation and would introduce a different consultation if harm to consumers re-emerged.
The exit fee ban was one of the only issues the regulator sought to address in the final investment platform market study report, published in March 2019, alongside rules to make in-specie transfers simpler.
Interactive Investor revealed it would permanently drop exit fees in November 2018, while Hargreaves Lansdown followed suit in September 2019.
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