The Financial Conduct Authority (FCA) has today written to
investment platforms and SIPP operators setting out its concerns
on the way they deal with any interest earned on customers’ cash
balances.
The amount of interest earned by some firms has increased as
rates have risen. The FCA recently surveyed 42 firms and found
the majority retain some of the interest earned on these cash
balances, which may not reasonably reflect the cost to firms of
managing the cash. Many also charge a fee to customers for
the cash they hold, known as “double dipping”.
The FCA is concerned these practices may not be providing fair
value to customers and may not be understood by consumers or
properly disclosed.
The practice of “double dipping” has raised concerns with the
regulator and firms have been told to cease this.
Sheldon Mills, Executive Director of Consumers and Competition at
the FCA said:
"Rising rates mean greater returns on cash. Investment platforms
and SIPP operators need now to ensure how much of the interest
they retain and, for those who are double dipping, how much
they’re charging customers holding cash, results in fair value.
If they cannot make that case, they need to make changes.
“If they don’t, we’ll intervene.”
Firms will need to make any changes by the 29th
February 2024.
Notes to editors
-
The FCA has written a Dear CEO
letter to 42 investment platforms and SIPP operators.
