FTAdviser understands the company prioritises the security of customers’ cash first, followed by ensuring constant liquidity, so clients can access their cash at all time, with its third priority being market competitive interest rates.
Alex Lambert, external relations manager at Hargreaves Lansdown said: “Our priorities are to protect clients, offer them a great service and market-competitive rates, actively tell them when they are holding too much cash for too long, and encourage them to use our active savings service.”
The Financial Conduct Authority
Data from the FCA in March 2019 showed that users on D2C platforms tend to have almost double the amount of exposure to cash in their portfolios than adviser platforms (8.8 per cent compared with 3.9 per cent).
The regulator said that 43 per cent of this cash on consumer platforms is held in pension wrappers (with 32 per cent of the overall figure in Sipps).
A third of non-advised drawdown consumers are entirely in cash, with half of these at risk of losing retirement income as a result, it said.
As a result, the FCA proposed new rules to force drawdown consumers to make an active decision to invest wholly or predominantly in cash, and that they should be warned by platforms about the potential risks of doing this.
The remaining cash held is in general investment accounts and Isas, of which three quarters is either newly invested or in accounts that have been actively traded in the last two years, which led the FCA to believe these consumers are “reasonably engaged”.
“Firms also told us there are good reasons why consumers might want to hold cash on a platform outside their pension wrapper.”
sally.hickey@ft.com
