Platform exit fees could be axed by the Financial Conduct Authority to improve competition and make it easier for investors to switch platform.

The regulator today set out a package of measures to help consumers who invest through investment platforms “more easily find and switch to the right one for them.”The FCA warned it would consider “further regulatory action” if the efficiency of the switching process does not improve.

The possible ban on exit fees is part of a package of measures set out today by the FCA in the final report of its Investment Platforms Market study.

The FCA study that found that while competition was generally working well some consumers and financial advisers can find it difficult to shop around and switch to a platform that better meets their needs.

Christopher Woolard, executive director of strategy and competition at the FCA, said: "While the market is working well for most of its consumers, the package we’ve announced today should make it less expensive and time-consuming for investors to shop around and move to the platform that best meets their needs.

“As part of that, we believe it is right that we restrict exit fees, so people can move their money freely."

The watchdog said consumers can find it difficult to switch due to the “time, complexity and cost” involved. This was driven in part by the exit charges investors can incur and difficulties switching between unit classes.

To address this the FCA said it would consult on rules to allow consumers to switch platforms and remain in the same fund without having to sell their investments. Additionally it would “ban or cap exit fees.”

The proposed restrictions on exit fees would apply to platforms and firms offering a comparable service to retail clients.

The FCA is seeking views from the wider market about how a restriction could work before consulting on any final rules.

The FCA welcomed the progress the investment sector is making to improve the switching process, most recently through the STAR initiative to improve the efficiency of the transfer process across the retail investment and pensions sectors.

The FCA is encouraging firms not already involved in this initiative to consider taking part as a way of improving the switching process and achieving better outcomes for consumers.

The FCA says it will review progress made by the industry to improve the switching process later this year, and again in 2020, if needed.

Since its interim report, the FCA said it had seen firms and the industry acting to improve the provision of information about costs and charges, helping consumers shop around.

As a result, the FCA is not proposing wider new rules but will review the progress of industry in 2020/21 and consider if further action is necessary.

The FCA consultation on new rules for switching and feedback on questions on exit fees runs until 14 June. The FCA may then consult on final rules for exit fees.