Writing in the latest edition of Financial Planning Today magazine, Mr Winfield said that platforms were focused on making sure that subjects like transfer times, fees and other potential risks of harm, particularly non-standard assets, were Consumer Duty compliant.

However, he said it did not go to plan for over half the market with 57% of platforms continuing to retain interest earned on investors' cash, for example.

Mr Winfield said: “This was an issue we had been highlighting for a while but it came to the fore when interest rates surged across the UK but not on cash held on some platforms. At the same time, we saw platforms reporting record profits.”

The FCA tackled the issue in December 2023 with a Dear CEO letter, citing how the practice did not meet the Consumer Duty or represent fair value.

An FCA survey in June 2023 found that 42 firms retained interest which collectively earned them £74.3m in revenue.

Mr Winfield said advisers were also unimpressed. He said: “At Defaqto we now see users of our research software, Engage, identifying how platforms facilitate returns on cash. Their focus being on identifying platforms that are paying the higher rates to consumers, after costs.”

He said the FCA expected action from all platforms. They must confirm changes to their working practices and rates paid and evidence this through their amended terms and conditions. Alternatively, they need to prove that their method of paying interest provides fair value to all investors.

Mr Winfield said: “We expect to see more from the FCA on this during 2024.”

Looking back on platforms in 2023, Mr Winfield reported that “mergers and acquisitions took a bit of a back seat.” He said the one notable change was the loss of the Embark and Advance by Embark platforms to the Scottish Widows stable.

He said that during the year there were record outflows from adviser platforms, £53bn compared with £39bn in 2022. He added: “ISA and pension wrappers were the main sources of income withdrawals, bringing platform service into focus.”

Looking ahead he said: “It is likely that we will see continued innovation in the adviser platform market with AI technology being a potential disruptor.”

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