AJ Bell’s consensus-beating annual figures hint at an uncomfortable feature of its business model. Interest generated on customers’ cash balances has provided a windfall for the investment platform provider.
Pre-tax profits last year were up by an annual 50 per cent, ahead of consensus expectations. That was partly the result of better cost-controls, but also higher revenue. The main driver of the 33 per cent rise in the latter was higher interest rates.
In the wake of new consumer duty rules being introduced in July, which require companies to deliver “good outcomes” for customers, it is likely to add to investors’ unease about any potential review into the rates paid to wealth management customers on their cash balances.
Investment platforms such as AJ Bell pass
