Advisers are concerned they will be unable to demonstrate initial and ongoing due diligence when recommending platforms to clients, research suggests.
A survey of more than 200 adviser firms by Capita Financial Software found only 20% said they were ‘very confident' of being able to prove they had carried out in-depth research for professional indemnity insurance (PII) purposes.
Capita says PII policies may be invalidated and premiums dramatically rise for those advisers who cannot evidence proper initial and ongoing due diligence.
"The results show that the legal and, in particular, due diligence aspects of using platforms with clients are still causing great concern for a significant number of firms," Capita business development director William Watling.
The findings of the research, which was carried out in partnership with AT8 Group and The Platforum, will inform a Capita white paper ‘Platforms - Big Issues and Big Solutions', which is set for publication next week.
Elsewhere, fewer than half (44%) of participating firms claimed to be ‘confidently prepared' for the onset of adviser charging through platforms in 2012, the research found. Just one in ten (11%) said they were ‘not at all prepared'.
On the issue of whether an adviser should be able to call themselves independent if they only use one platform, the results were split: 44% agreed that advisers should be able to label themselves as independent while 40% disagreed.
Meanwhile, firms were also mixed on how they were planning to compare platforms, including offerings, costs and features, for their clients.
Whilst two thirds (67%) of advisers were intending to look for a technology-based solution, more than one in ten advisers admitted they had not given thought to the issue yet and a further 14% said they intended to conduct manual, desk based research.
Watling adds: "We produced this white paper research study as we were keen to really understand the barriers many advisers felt when it came to using one or more platforms.
"And, given the complex regulatory and legal parameters which are such an important part of using platforms correctly, we felt it was necessary to take a really no nonsense approach and consider the positive and negative aspects as they currently stand."
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