British financial regulators are taking another step to do away with embedded commissions by proposing to ban payments from investment product manufacturers to investing platforms.

The UK’s Financial Services Authority issued a consultation paper Wednesday on proposals that aim to ensure that investors can make fully-informed decisions when they consolidate their investments on a platform (which is similar to a wrap account or managed account); so that they understand exactly what they are paying for this service.

Currently, the FSA says, providers of investment products, such as investment managers, often pay to have their products included on a platform, and this cost is passed on to the investor in the price of the product. However, clients often aren’t aware of these costs, and their effect on the value of their investments.

In order to bring greater transparency to this arrangement, the FSA is proposing a ban on all payments from product providers to platforms. Instead, they would have to charge consumers directly for their services.

The FSA says that the proposed changes will make charges clearer to investors and increase competition in the market by making it easier for investors and advisors to compare the costs of investing through different platforms. This also follows its effort to do away with embedded commissions for advisors, which is scheduled to take effect on Jan. 1, 2013.

“Investors are increasingly using platforms as a convenient ‘one stop shop’ for their investments, but at the moment many investors have no idea what they are paying for this service, while some believe it is free. This needs to change. Today we are proposing changes that give investors and their advisers more control and mean that they know exactly what they are paying for a platform’s service,” said Sheila Nicoll, director of conduct policy at the FSA.

The FSA plans to publish its finalised rules on platforms before the end of 2012, allowing platforms over a year to implement the necessary changes to their business models before the rules come into effect on December 31, 2013.