FCA finds conflicts of interest in D2C platform 'best buy' lists

Investors see no performance-related benefit from affiliated best buy funds

Direct-to-consumer (D2C) platforms favour affiliated funds and those that pay them greater commission rates when comprising best buy lists, FCA research has found.

In its ‘occasional paper', Best buys and own brands: investment platforms' recommendations of funds, the regulator sought to identify "potential conflicts of interest when creating these lists". FCA outlines five steps for handling insistent clients The report said: "Controlling for past performance, Morningstar analyst rankings, costs, and other variables, affiliated funds are significantly more likely to be added to the recommendation list than non-affiliated funds. "Average model-implied addition probabilities, across the three platforms and the whole data sample, for affiliated...