British investment platforms Hargreaves Lansdown and AJ Bell saw their shares plunge on Tuesday after a U.K. regulator warned 42 firms that it may intervene on fees and interest charges.
Hargreaves Lansdown shares were down more than 7% by late morning trade, while AJ Bell fell more than 8% after the Financial Conduct Authority announced it had written to investment platforms with concerns over the way they deal with interest earned on customers' cash balances.
The FCA recently surveyed the 42 companies and found that the majority retained some of the interest earned on these cash balances. The regulator said this may not reasonably reflect the cost to those companies of managing clients' cash.
Many also charged fees to customers for holding cash, known as "double dipping," the FCA said in a statement Tuesday, adding that companies have been told to cease this practice by the end of February or risk regulatory intervention.
"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," said Sheldon Mills, the FCA's executive director of consumers and competition.
"If they cannot make that case, they need to make changes. If they don't, we'll intervene."
CNBC contacted both Hargreaves Lansdown and AJ Bell for comment.
AJ Bell declined to comment, but CNBC understands the firm does not charge a platform fee on cash and would therefore be outside the FCA's crosshairs on "double-dipping."
Hargreaves Lansdown said it does not undertake the practice of "double-dipping" but would "continue to work actively with the regulator following today's letter to further review our practices."
A spokesman said the firm is "aligned with the FCA's focus to ensure good value and outcomes for clients and undertook a broad and rigorous assessment of its practices including a review of its Fair Value Assessments earlier this year."