P1 Launches Hidden Cost Calculator to Reveal True Platform Fees Amid FCA Fair Value Push

P1 Platform has launched an online calculator to help financial advisers quantify the impact of interest retained on client cash balances. As the FCA prepares new disclosure rules for 2027, this tool addresses a hidden cost that often distorts platform fee comparisons, ensuring advisers can provide more accurate value assessments and improve long-term client outcomes.

What was announced

P1 Platform’s new online calculator allows financial advisers to compare various investment platforms by revealing how much interest is generated on cash holdings and, crucially, how much of that interest the platform retains. The tool calculates the resulting uplift to the effective platform charge and the long-term impact on a client's portfolio. This launch follows research conducted by Transact, which has advocated for retained interest to be treated as part of the overall cost disclosure to clients when assessing value and suitability.

Current platform comparisons typically focus on published charges such as ad valorem fees, dealing costs, and wrapper charges. However, retained interest does not appear as an explicit charge and is frequently missing from due diligence, despite directly reducing the total return achieved on platform holdings. P1 highlights that for a client with a £500,000 portfolio and a 5% cash allocation (£25,000), a platform retaining 2% of the interest earned effectively adds 0.10% to the platform charge. Over 20 years, assuming 5% annual growth, this hidden cost could reduce a portfolio by approximately £25,000.

The initiative aligns with shifting regulatory expectations. An FCA finding in 2023 revealed that 71% of platforms and SIPP operators retain some interest, keeping about half on average. Final FCA rules on this practice are expected by the end of 2026, with mandatory disclosure requirements currently proposed to take effect from June 2027. P1’s tool aims to bridge this transparency gap immediately for advisers during the selection process.

"Advisers put considerable effort into comparing platform charges, but much of that analysis focuses on published fees. The treatment of client cash is often overlooked because it does not appear as an explicit charge."

James Priday, Chief Executive Officer, P1 Investment Services

The companies involved

P1 Investment Services, which operates the P1 Platform, focuses on providing digital-first investment solutions for financial advisers. The firm positions itself as a transparent alternative in a market where fee structures can often be opaque. James Priday serves as the Chief Executive Officer of the organization, which supports the view that while platforms may generate revenue as they see fit, transparency for the end client is paramount.

Transact, operated by Integrated Financial Arrangements Ltd, is a major player in the UK platform market. Known for its proprietary technology, Transact has established a market position based on passing all interest earned on client cash balances directly to the clients, rather than retaining a portion as revenue. This stance has made the company a vocal advocate for greater transparency regarding "hidden" platform costs. Tom Dunbar currently leads the firm as Chief Executive Officer. Both companies are navigating a competitive landscape where the Financial Conduct Authority is increasingly scrutinizing "fair value" under Consumer Duty requirements, putting pressure on firms that rely heavily on interest margins to subsidize headline platform fees.

What FF News has reported before

FF News has previously tracked developments within the broader investment and custody space, including the infrastructure that supports these platforms. This includes reporting on major service extensions such as when WBS Secures Five-Year Extension with Aviva for Advanced Dealing and Custody Services. While that specific development focused on the institutional dealing and custody side of the market, it underscores the ongoing reliance of major UK financial institutions on robust third-party technology and administrative services to manage client assets efficiently. The integration of such services is a critical component for platforms like Transact and P1 as they seek to balance operational costs with the transparency requirements now being championed by the industry and the regulator.

What this means

This move signals a significant shift in the competitive dynamics of the UK platform market. By weaponizing transparency, P1 and Transact are putting direct pressure on larger, legacy platforms that have long used "spread" on cash interest to keep headline fees artificially low. As the FCA’s 2027 deadline approaches, the industry faces a reckoning over the definition of "fair value." Platforms that fail to adapt their revenue models away from hidden interest retention may find themselves increasingly difficult to justify in an adviser’s due diligence process. The central question for the sector is whether headline fees will inevitably rise as these hidden subsidies are stripped away.