ISA charges

jeremy.troughton

Hi - wondering if someone can advise me?

I have had a Legal and General ISA where I pay in about 160 per month, which is set to mature in a good few years to pay off the capital side of an IO mortgage.

Of this I pay approx 268 per annum in charges direct to L&G.

I do not feel these charges were not explained in full to me at the time of taking out the policy.

Do I have a leg to stand on?

Many thanks

JT

rsykes2000

I doubt you have a leg to stand on, no. The charges will have been given to you before the policy was taken out, it's basically only your fault - if you didn't understand you should have asked (although I imagine it will definitely be a percentage charge per month/year which anyone can understand) or if you didn't read the small print.

dunstonh

Did you think L&G were doing it out of love?

PosterBoy77

dunstonh wrote:

Did you think L&G were doing it out of love?

No, but they are not offering a very competitive product. Given that there is plenty of choice in the market, my guess is that the OP would like to find out what he can do to improve his situation.

The good news is that he should be able to do quite a bit. Whilst it is unlikely he can do anything about the fees paid so far, He can transfer the ISA to a discount broker such as Hargreaves Lansdown, and choose a fund to invest in which has lower charges and better performance. H&L are good as they will refund most of the charges made by fund managers back to you.

It is likely that L&G will tell him that he would have to close the ISA and take out the money, therefore loosing the tax-free wrapper that the ISA offers. This will not be true. Hargreaves Lansdown and other brokers like them can initiate a transfer into themselves and they will take care of any obstacles L&G may put in place.

My girlfriend had an underperforming equity ISA with Nationwide BS Fund Managers. They gave the same incorrect advice, but H&L sorted out the transfer without any trouble.

Mr_helpful

Would you have bought solely on fees. Most people dont unless they always buy crap.Fund management costs money and is a bit like a football team I doubt Man U or chelsea would be where they are by buying the cheapest player available
Plus details of the charges were on the literature.

jamesd

You have plenty of legs to stand on, assuming that you're interested in moving the ISA investments to an ISA with lower fees or possibly better investment choices. You won't get the fees you're paying now back, but can stop paying them in the future.

Mr_helpful

You dont say what fund the money is invested in and also how much or how little the fund has made.
Other things spring to mind. As this has a maturity date is it a true isa or L & G's flexible mortgage plan which has life assurance as well built in because it is classed as an endowment. The early ones of which were front loaded on charges and so changing now would probably be detrimental as far as overall charges were concerned plus when considering a new manager remember past performance is no guide to future performance. I am an ex IFA you should really consult a current one.

PosterBoy77

Mr_helpful wrote:

Would you have bought solely on fees. Most people dont unless they always buy crap.Fund management costs money and is a bit like a football team I doubt Man U or chelsea would be where they are by buying the cheapest player available
Plus details of the charges were on the literature.

Fund management does cost money, but unfortunately in the world of fund management, the fees are very rarely related to performance. If they were, they would be much lower! Some of the worst performing funds have the highest charges, and some of the best perfoming funds have low charges. It is very rare to get what you pay for in the world of fund management. Also, many of the fees charged by fund managers are inflated to allow for commission to be paid to advisors. Discount Brokers such as Hargreaves Lansdown will get this, but hand almost all of it back to the customer, therefore significantly reducing the fees, even on expensive funds.

PosterBoy77

Mr_helpful wrote:

You dont say what fund the money is invested in and also how much or how little the fund has made.
Other things spring to mind. As this has a maturity date is it a true isa or L & G's flexible mortgage plan which has life assurance as well built in because it is classed as an endowment. The early ones of which were front loaded on charges and so changing now would probably be detrimental as far as overall charges were concerned plus when considering a new manager remember past performance is no guide to future performance. I am an ex IFA you should really consult a current one.

Front ended charges can make it less worthwhile to move, but from the fees mentioned, it sounds like they are still not low. From what I know L&G are not the star performers of the fund world, so whilst it is sensible to bare in mind that past performance is no guide to future performance, it is very likely that L&G will certainly not suddenly become the best either.

PosterBoy77

Mr_helpful wrote:

Would you have bought solely on fees. Most people dont unless they always buy crap.Fund management costs money and is a bit like a football team I doubt Man U or chelsea would be where they are by buying the cheapest player available
Plus details of the charges were on the literature.

While these teams have spent lots on players, there are many teams who probably get much better bang for their buck. Some of the teams lower down the rankings still do very well with much lower expense.

Mr_helpful

true but hindsight is a wonderful thing and the beast performer over the last five years is unlikely to be the best over the next. Is the cost of swapping going to be recouped by the gains. Depending on the fund I didnt think L & G was so bad but I dont look that often. as mine is with framlington who are now axa.
The problem is most of us dont have the PI insurance in case he swaps and then loses money and wants to sue for his losses so my advice of speak to an investment adviser still stands. There are some on this site who I am sure could help.