* FCA says investment platform market generally working well
* Some consumers find it hard to switch platforms
* Proposes to ban or cap exit fees (Adds detail from FCA statement, background, bullet points)
By Simon Jessop and Huw Jones
LONDON, March 14 (Reuters) - Britain’s financial markets regulator on Thursday proposed a package of measures aimed at improving competition in the investment platforms market, including restricting the use of exit fees.
It follows initial recommendations set out last July to help five types of customers in the 500 billion pounds ($663.25 billion) sector, dominated by Hargreaves Lansdown along with smaller companies including AJ Bell.
At the time of its initial report, the Financial Conduct Authority said it would give platforms until the start of 2019 to make changes or it would consider further measures, including a ban on exit fees.
In Thursday’s final report, the FCA said its Investment Platforms Market study had shown that while competition was generally working well, some consumers can still find it difficult to switch to a platform that better meets their needs.
Specifically, consumers can find it difficult to switch due to the time, complexity and cost involved - driven in part by the exit charges they incur and difficulties switching between unit classes, it said in a statement.
To fix the problem, the FCA said it was consulting with industry on rules to allow consumers to switch platforms and remain in the same fund without having to sell their investments, and is proposing to ban or cap exit fees.
“While the market is working well for most of its consumers, the package we’ve announced today should make it less expensive and time-consuming for investors to shop around,” FCA Executive Director of Strategy and Competition Christopher Woolard said.
“As part of that, we believe it is right that we restrict exit fees, so people can move their money freely.”
The five types of customers flagged in the FCA’s initial report were those who want to switch platforms, users of platforms that are not linked to a financial adviser, those who use model portfolios, customers with large cash balances, and “orphan” clients who no longer have any relationship with a financial adviser.
$1 = 0.7539 pounds Reporting by Simon Jessop; editing by Sinead Cruise