The FCA has delayed a controversial potential ban on platform exit fees to allow for more consultation with the sector.

In its Investment Platforms Market Study, published in March, the FCA proposed a raft of reforms - including a ban on exit fees - to improve competition in the platform sector and make it easier for investors to switch platforms.

However, the regulator has now decided to defer any ban on exit fees until further consultation takes place in the first quarter of 2020.

In its earlier paper the FCA warned it would consider “further regulatory action” if the efficiency of the switching process did not improve.

Today the FCA said: “We noted in the IPMS (Investment Platforms Market Study) Final Report that the industry is taking steps to improve the timescales and customer experience in switching.

“We concluded that, for the most part, further regulation is not currently needed. But there were two exceptions, where we felt that regulatory intervention may be needed to improve competition. One of these is exit fees, which we plan to consult on separately in Q1 2020.”

The FCA has made no further comment on its exit fee plans beyond this statement suggesting any such move, if it happens, is some time away.

The watchdog says the investment platform sector has made improvements to switching, noting the progress of the industry-backed STAR initiative which is now supported by 52 providers.

It said: “We, along with the Department for Work and Pensions (DWP) and The Pensions Regulator (TPR), continue to support STAR’s aim and works.

“The framework STAR is implementing is aligned with our desired outcomes to improve the customer experience, reduce the time it takes to complete transfers and ensure consumers can move to a platform that better meets their needs.”

The regulator also confirmed today its new rules designed to make in-specie transfer of investments much easier.

The new rules, due to come into force on 31 July, should enable investors to transfer units from one provider to another rather than cashing in at one platform and then moving the money to another provider. This would enable investors to be fully invested throughout the process.