FCA raises concerns over how firms deal with customers’ cash balances amid ‘double dipping’ practices
The Financial Conduct Authority (FCA) has raised concerns over how firms deal with interest earned on customers’ cash balances.
After surveying some 42 firms, the regulator found that most retain at least some of the interest earned on customers’ cash balances, while some also may charge a fee — also 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 regulator said this morning.
The regulator has written to investment platforms and Self-Invested Personal Pension (SIPP) operators today to set out its concerns, stating that the practice of “double dipping” must be ceased.
Sheldon Mills, executive director of Consumers and Competition at the FCA, said: “Rising rates mean greater returns on cash.
Mills continued: “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.”
The regulator said the firms have until 29 February to make any changes necessary.