Admin fees - what's reasonable?

ConfusedSwimmer · 16 November 2017 at 6:38PM

Hi all, first post, so I hope this is the right place etc!
Three years ago I invested £5k in an Industrial & Provident Society. I now want to withdraw the investment but have been told I must pay an admin fee of £150 to do so.
I've queried this and am awaiting a response.
I can find lots of info about the "reasonableness" (or otherwise) of admin fees in relation to property leases and insurance products, but nothing in relation to investments. So I'm wondering if this is standard practice and if so, whether 3% is reasonable or if the society are having a laugh!!
Many thanks for any insight!

bowlhead99 · 16 November 2017 at 7:01PM

What did you agree as the fee as part of the terms and conditions when buying the product?

dunstonh · 16 November 2017 at 7:05PM

Remember if you do not use normal retail products but go into niche things you cannot expect normal retail product disclosures or standards. This is not a retail product.

There will not be the economies of scale that exist on retail products or more conventional investment instruments. So, you would expect it to be a more manual process and given the nature of I&PS, you would expect to cover their whole costs. Plus, the society may not have the funds available at this time or it may not be an ideal to time to repay you. So, they can delay it.

Your post interchanges what the fee is. Is it quoted as 3% or £150?
The society will have rules set on their charges. So, what do their rules say?

Societies normally have a minimum charge to discourage people buying/selling small amounts which would be expensive for the society to handle. You may be subject to the minimum charge or it may be a flat charge.

Money_Help · 17 November 2017 at 8:37AM

Its a ridiculous fee in this modern world of saving and investing however if that was what was agreed at the time and in the T&Cs you probably have no choice.

Glen_Clark · 17 November 2017 at 10:26AM

You might also have to remember its normal to be overcharged on some things and undercharged on others. Like we get free current account banking and an above market rate of interest, which they have to claw back by overcharging somewhere else.
If thats in the terms and conditions you signed up to you might as well grin and bear it.

dunstonh · 17 November 2017 at 11:07AM

Money_Help wrote: »

Its a ridiculous fee in this modern world of saving and investing however if that was what was agreed at the time and in the T&Cs you probably have no choice.

What do you think the fee should be then?

Remember that this is not a retail financial product. It is a specialist, niche transaction involving the sale of unlisted shares of which there may only be a few dozen holders.

ConfusedSwimmer · 17 November 2017 at 1:04PM

Thanks all for your replies.
I have now received confirmation from the society that the admin fees are 5% of the shareholding, subject to a maximum of £150 (as my investment is £5k I am being charged the maximum fee).
I have checked the original prospectus - no mention of admin fees at all.
The Rules state that shares may be withdrawn "less any costs incurred by the Co-operative in relation to that withdrawal".
To me, the statement in the Rules suggests that the admin fee should be based on actual costs, not on a percentage based on the size of shareholding and I am querying this with the Society now.

dunstonh · 17 November 2017 at 5:11PM

To me, the statement in the Rules suggests that the admin fee should be based on actual costs, not on a percentage based on the size of shareholding and I am querying this with the Society now.

The actual costs are higher than dealing with listed shares, as already mentioned (no computer system. No economies of scale. Possibly using a local solicitor to do the admin).

Whilst they will not aim to profit out of the admin charge, the person that has to take the admin to the local solicitor or auditor has to have their travel costs covered. The auditor/solicitor will bill them. There is usually cross checking. Your withdrawal may need to be raised at the next meeting and discussed. It's all a pretty manual process involving multiple people. It's not cheap.

You are going to be totally reliant on the goodwill of the society to reduce it. However, that as well may require a meeting to be discussed as it would be taking money away from a community project.

Admin fees - what's reasonable?

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