The amount of interest earned by some firms has increased as rates have risen. The FCA recently surveyed 42 firms and found the majority retain some of the interest earned on these cash balances, which may not reasonably reflect the cost to firms of managing the cash. Many also charge a fee to customers for the cash they hold, known as “double dipping”.

The FCA is concerned these practices may not be providing fair value to customers and may not be understood by consumers or properly disclosed.

The practice of “double dipping” has raised concerns with the regulator and firms have been told to cease this.

Sheldon Mills, Executive Director of Consumers and Competition at the FCA said:

"Rising rates mean greater returns on cash. Investment platforms and SIPP operators need now to ensure how much of the interest they retain and, for those who are double dipping, how much they’re charging customers holding cash, results in fair value. If they cannot make that case, they need to make changes.

“If they don’t, we’ll intervene.”

Firms will need to make any changes by the 29th February 2024.