Fund supermarket best-buy fund lists could be at risk of conflicts of interest, according to the Financial Conduct Authority (FCA).
The regulator has examined the way best-buy lists are put together and who benefits from them in a new occasional paper. It found that the percentage of affiliated funds was 3.8 per cent larger on best-buy lists than the percentage of non-affiliated funds and that they were less likely than non-affiliated funds to be kicked off best-buy lists after making it onto the selection.
"These lists are also subject to conflicts of interest," said Gordon Cookson, one of the authors of the study. "Some platforms are affiliated with fund providers, meaning the fund supermarket is also an asset manager. In essence, this means platforms are offering their 'own brands' in the supermarket, potentially at the expense of other brands."