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Fidelity lobbies FCA to ban exit fees

Fidelity is lobbying the FCA to ban charges for transferring assets off investment platforms.

Exit fees are typically charged on direct platforms.

Hargreaves Lansdown and AJ Bell’s D2C platforms both charge £25 per line of stock to re-reg off platform, while Alliance Trust Savings charges £100 to re-reg away from the platform.

Both Fidelity and ATS offer to compensate clients moving onto their respective platforms if they are charged exit fees by a ceding platform. 

Fidelity Worldwide Investment head of personal investing Mark Till says: “For the typical Isa investor this year, we are seeing some of our competitors levy exit charges that amount to in excess of 1 per cent of their portfolio value. This can add significantly to the headline cost being quoted by a provider.

“Customers are now telling us this is becoming a material issue for them when they look to move between providers. Not only are charges high, but the mechanisms for collecting these fees are creating further delays in transfers.

“We would like to see an outright ban on these types of charges, as we believe they are creating meaningful barriers to customers moving assets. We continue to talk to the FCA on this matter. Hitting customers with additional charges can make a significant dent in an investor’s saving pot over the long run, something that is too often not taken into account, and we believe exit fees should be banned from long-term savings products.” 

Hargreaves and ATS both told Money Marketing earlier this month reductions to exit charges could be considered in future.

The FCA has expressed concerns that exit fees could act as a barrier to exit.

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. Assuming there is a cost to transferring…

    If there are no exit charges then presumably Fidelity are advocating hiding them elsewhere in the charges? Not so good for those who don’t transfer as they are subsidising those that do.

    So much for transparency and fairness.

  2. @ Grey Area

    I don’t think they are moaning to much about the charge itself, but more to do with the barrier this creates for the client.

    Bit like MVA’s on WP business,

    From a clients perspective; damned if you do (pay a charge to move) damned if you don’t (stay with a inappropriate investment).

    If we want people to be honest about charges these need to be accounted for, not just a bolt on extra ?

  3. @ DH

    I think we’re talking about perception (you) and reality (me).

    There is a cost to transfer out. Charging this at the point of exit (providing it fairly reflects the actual cost) is being transparent and fair. The alternative is bundling this cost somewhere else so that it is effectively pre-paid and, furthermore, the clients that stay subsidise those that leave.

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