Retail investment platforms have reportedly been instructed by the FCA to return cash to customers following the accumulation of large customer cash balances.
According to The Financial Times, the FCA has been sending out “Dear CEO” letters to some of the biggest investment platforms – asking cash to be returned to customers as they are hosting abnormally large amounts due to the initial sell-off during the pandemic.
The FCA is reportedly asking for the returns to be made because investment platforms tend to pay nil interest (not that a bank pays much!), some may charge fees on the cash held and there is greater risk for the customer should the platform go bust.
One platform reportedly seen its revenues on cash reach £91m at the half-year point due to the increase in cash holdings – showing a 25% increase on interest earned on cash reports the FT.
Understandably, some platforms are reportedly not happy at the idea – arguing that as DIY investors, it is up-to the customer to decide what to do with its cash.