Investor platform TD Direct has thrown down the gauntlet to rivals by scrapping exit charges and planning a financial advice service to customers.
The platform, where private investors make their own decisions on shares and funds, has asked the regulator for permissions to provide "non-personal online advice".
The Financial Conduct Authority has recently said online financial advice can escape the full rigour of regulation as long as it does not involve a "personal recommendation" based on an individual's data.
TD says the permissions will enable it to offer "a wide selection of additional support services and tools".
The broker has also shaken up the market by scrapping its fees for transferring stocks or funds in or out, and its exit fee for closing an account.
John Tracy, head of TD Direct Investing, said: "Lack of transparency, complexity, the transfer process and high exit fees are four factors that can erode people's trust in DIY investing.
He added: "We want to build an industry which supports rather than demands, and encourages rather than penalises. Ultimately, we believe investors should have the freedom to make their own investment choices, including which platform to use, and scrapping exit fees is an important first step."
Mark Polson at Edinburgh-based platform experts The Lang Cat said the move was welcome, if overdue. "We've been calling on the direct platforms industry to clean up its act and remove or reduce excessive exit charges for some time."
Most major platforms offer information tools and some proffer fund selections, at risk of appearing to recommend investments and be giving advice.
Tilney Bestinvest for instance has just published its Premier Selection. Managing director Jason Hollands says its star-rating system differs from buy lists, "where funds are either on them or not", and notes that 36per cent of its rated funds are investment trusts which are often excluded from lists despite superior performance.
Trustnet Direct, which runs its back office in Glasgow employing 60 people, is taking its expertise as one of the industry's handful of sources of fund statistics, and the first to be established 20 years ago, to try to fill the advice gap.
Chief executive John Blowers said: "We are at a pivotal point where we have got to reinvent the investment industry for retail."
Mr Blowers said the platform's 'health checker' screens every fund in the market and deals in purely quantitative information to grade funds from A to E. "If the fund you check comes in at C to E it will suggest funds that are better....it is designed to show the bangers."
Mr Blowers added that one well-known firm's list of discounted funds, put through the health checker, reveals "a very high weighting of C D and E ratings". He commented: "You don't get a discount on an Apple product, because you want one badly enough."
Mr Polson said: "We see a huge appetite from many providers to try and help those who are unwilling or unable to afford advice make better decisions at retirement - the danger is that 'better decisions' becomes a byword for 'invest your money with us'. This is a great time for companies like TD, Trustnet Direct, Fidelity and AXA Self Investor to provide genuinely useful information and let the chips fall where they may commercially. I think they'll be rewarded for that, as they will for getting rid of charges which belong to a bygone era."
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