Regulation and supervision of platforms
What this domain tests
The regulatory architecture around platforms: who supervises, which Handbook modules bite, how Consumer Duty applies, and what happens when client assets or complaints go wrong.
Regulators and rulebook map
- The FCA is the conduct regulator; the PRA is prudential and relevant only to certain firms. Most platforms are FCA-only, though MiFID investment firms are subject to the MIFIDPRU prudential regime.
- Key modules: COBS (conduct, including 6.1ZA platform disclosure and 6.1A adviser charging), CASS (6 custody, 7 client money), SYSC (governance, risk, outsourcing), PROD (product governance), DISP (complaints), MAR (market abuse), SUP (reporting).
- MiFID II adds best execution, ex-ante and ex-post cost disclosure, appropriateness and transaction reporting for MiFID business.
Consumer Duty
In force for open products from 31 July 2023 and closed products from 31 July 2024. Three cross-cutting rules: act in good faith, avoid foreseeable harm, enable and support customers to pursue their financial objectives. Four outcomes: products and services, price and value, consumer understanding, consumer support. Platforms must evidence fair value of their own charge and of the wider chain.
Client assets, compensation and complaints
- CASS 6/7 require segregation, daily internal reconciliations, at least annual external reconciliation, records, and a CASS resolution pack supporting wind-down.
- FSCS protects investments up to £85,000 per person per firm. It does not cover market losses.
- Financial Ombudsman Service: complaints resolved within eight weeks or the client may escalate; the award limit is £430,000 (from April 2024).
- SM&CR applies: a platform CEO is typically SMF1, with prescribed responsibilities for compliance, finance and client assets.
Worked example
A platform discovers its daily client money reconciliation has not been performed for three weeks. This is a CASS 7 breach. The firm must correct and complete the reconciliation immediately, assess whether client money is short, notify the FCA, consider its CASS audit obligations, and examine individual accountability under SM&CR. Reason: CASS breaches are treated as strict in practice - good intentions are no defence.
Traps that cost marks
- Assuming Consumer Duty applies only to manufacturers; platforms are both manufacturers and distributors.
- Believing FSCS covers poor investment performance.
- Missing that the FOS time limit runs from the firm's final response, not the original complaint.
- Overlooking MIFIDPRU for MiFID-authorised platform firms.