The Financial Services Authority (FSA) is planning to introduce a ban on fees placed on investment managers to use platforms provided by insurers, which could lead to those providing the 'one-stop-shops' having to pay up to £20 million to upgrade their systems.
At present, providers of investment products generally pay to have their products included on an insurer's platform, and often this cost is then passed on to the investor in the price of the product.
The FSA hopes that by introducing a ban on such fees it will make charges clearer to investors, who often think that use of the platform is free, and also increase competition in the market.
A ban would allow investors and advisers to compare the costs of investing through different platforms and make an informed decision on whether using a platform represents good value for money, the FSA said this week.
"Investors are increasingly using platforms as a convenient 'one-stop-shop' for their investments, but at the moment many investors have no idea what they are paying for this service," said Sheila Nicoll, director of conduct policy at the FSA.
"This needs to change. We are proposing changes that give investors and their advisers more control and mean that they know exactly what they are paying for a platform's service."
The cost for insurer's to upgrade their systems, as a result of the ban, will range from between £200,000 and £20 million.
There are currently 27 traditional platforms operating in the platform services market in the UK, representing approximately £229 billion worth of assets, according to a report by Deloitte that was commissioned by the FSA.
The FSA plans to publish its finalised rules on platforms before the end of 2012, allowing platforms over a year to implement the necessary changes before the rules come into effect on the 31 December 2013.