Investors have remained cool on IFG despite the Irish-founded financial services group being touted as a potential beneficiary of a shake-up of the UK’s £500bn (€565m) investment funds platforms sector.
The company’s shares, already down by over 11.5% in the past 12 months, slipped by nearly 1.3% despite the Financial Conduct Authority (FCA) looking to improve competition in the UK funds market.
Britain’s markets watchdog has proposed measures to help five types of customers get better value for money in the investment funds platforms sector.
The FCA said the sector has almost doubled in size since 2013, attracting an extra 2.2 million accounts as customers increasingly rely on platforms to manage their money.
Revenue from retail consumers reached £1.3bn last year, up from £750m in 2013.
“We know that competition is working well for many but it is important that the problems we have identified are addressed so that consumers don’t lose out,” said Christopher Woolard, the FCA’s executive director of strategy and competition.
IFG is being seen as a potential beneficiary of less restrictions for customers.
“The investment platform market continues to experience significant growth and, while the market generally services consumers well, the FCA has found some areas of concern, principally related to consumers’ ability to switch provider. For IFG, James Hay [its specialist pensions provider] focuses distribution through independent financial advisers and, hence, should be better placed from the review, albeit it may provide some challenges to earnings from cash balances,” said Davy analysts Diarmaid Sheridan and Stephen Lyons in a joint research note.
The interim report looks at five types of consumers: those who want to switch platforms, users of platforms that are not linked to a financial adviser, those who use model portfolios, customers with large cash balances, and “orphan” clients who no longer have any relationship with a financial adviser.
About 7% of consumers have tried switching platforms but failed to do so, the FCA said.
- Additional reporting Reuters