FCA pours cold water on reports of widening exit fee ban

It is unclear whether the FCA will consider widening its platform exit fee ban after the regulator poured cold water on reports it was preparing a new consultation.

The Financial Times reported this morning that discussion had taken place over a potential paper laying the background for a widening of the proposed exit charge ban on to a broader range providers like wealth managers and pension funds.

The regulator proposed prohibiting online investment platforms from levying charges for customers wanting to leave their service in a market study this July.

Affected investment platform providers have lobbied FCA to widen the ban on exit fees to large wealth managers and pension providers, citing unfair treatment, according to the FT.

According to the Financial Times sources “the FCA had acknowledged the issue in private meetings and was receptive to the idea of a consultation next year”.

However, the regulator has told Money Marketing that there is currently no consultation planned in this area.

The FCA said it is currently reviewing the industry’s on the platform study, before publishing its final report in the first quarter of 2019.

Some platforms such as Interactive Investor have decided to proactively scrap the exit charges ahead of the final report.

Wealth manager SCM Direct chief investment officer Alan Miller, who has been a vocal critic of charges in the industry, thinks it is “complete scandal that the FCA has allowed SJP to charge its customers an exit charge of up to 6 per cent, which is likely to be far larger than the typical platform exit fee.”

Miller says: “Here is a case in point, it shows the FCA is again failing in its objectives as regards enhancing market integrity or promoting effective competition in the interests of consumers when it can look at banning exit fees from investment platforms in isolation.”