Fidelity Fundsnetwork preventing partial stocks and shares ISA transfers

SnowMan

Just to confirm that Fidelity Fundsnetwork have changed their terms and conditions to prevent partial transfers of ISAs away from their platform.

So an investor with say a 140K ISA portfolio with them wants to transfer 20K away, then Fidelity won't now allow them to do so.

I raised a complaint with Fidelity after reading about it in this article. Fidelity have confirmed yesterday that they are not allowing me to make a partial ISA transfer out to invest in Vanguard funds they don't themselves offer. Fidelity said the ban on partial transfers was being made as a result of changes they made because of RDR (although to be clear here they weren't claiming that RDR prevented them from allowing partial transfers). I am now re-registering all my investments away from Fidelity.

Interesting in the latest printed copy of terms and conditions I have for Fidelity Fundsnetwork dated April 2012 it says

You may instruct Fidelity to transfer to another approved manager either (i) the whole of your ISA or (ii) part of your ISA.......... In the case of a partial transfer, the investments remaining after the transfer must, unless otherwise permitted by Fidelity have a minimum value of £1,000.....

The terms and conditions currently on their website now for October 2012 says

You may instruct Fidelity to transfer to another approved manager the whole of your ISA....

There is no longer any mention of partial transfers and clearly their policy is now to disallow them.

There is no information I can currently find anywhere on their website that explicitly says they won't allow partial ISA transfers out.

Fidelity were unable to tell me on what contractual basis they could justify the ban on partial ISA transfers.

As someone with ISAs on the platform before April 2012 I was not aware that they had made this change to their terms and can't recall any communication telling me about this.

I would like to warn others of this so they don't get caught when they are attempting to make a partial transfer out of stocks and shares ISAs from Fidelity Fundsnetwork.

I understand from an earlier phone call that the partial ISA transfer ban also applies to ISA funds held direct with Fidelity as well as those held through Fidelity Fundsnetwork. Don't know if it affects those using Fidelity Fundsnetwork via Cavendish.

talexuser

Very interesting. I wonder if this would stand up in court as unfair conditions, particularly if investors were not told of this major change in their terms and conditions.

SnowMan

talexuser wrote: »

Very interesting. I wonder if this would stand up in court as unfair conditions, particularly if investors were not told of this major change in their terms and conditions.

Fidelity Fundsnetwork have now accepted that they did not give me written notice of the change in terms and conditions to not allow partial transfers and offered a £50 goodwill payment which I have accepted.

Their current terms and conditions do not allow partial transfers out of ISA holdings (either to cash or by re-registration), so investors need to be aware of this.

I am in the process of transferring my ISA away but still have non-ISA funds on the platform.

Fidelity Fundsnetwork are still currently a good option for holding the retail class HSBC trackers (see the offers below also). They don't seem to be in any rush to make changes as a result of platform RDR.

Incidentally Fidelity Fundsnetwork have a 'half price' for 12 months ISA offer on at the moment (see here) for new money paid into an ISA before 5th April 2013.

They have a very interesting £75 per £10,000 transferred ISA transfer offer (max cashback £7,500) running to 30 April 2013. Funds must be held for 18 months. So perhaps they are using this to retain investors when platform RDR comes in.

Porcupine

Hmm...

Email_from_Cavendish wrote:

Dear Porcupine
Thank you for your email.

Commission rebates are paid into your largest fund but they do not form part of your ISA allowance.

We do not charge you any exit fees.

You would be able to do a partial transfer if this is acceptable to the people you are transferring to.

That's most interesting. I'm a bit puzzled though - if it's Fidelity who actually hold the money, how can they allow partial transfers via one frontend but not another? Just that Fidelity can't be bothered with the paperwork?

And asks another question: which providers are 'partial' to partial transfers in? Does being a partial transfer reduce our options?

westy22

As far as I know, almost all providers just state that they accept ISA transfers in - I've never come across one stipulating that you must transfer all or nothing to them. Anyway, how would the new provider even know what you held with other providers?

talexuser

SnowMan wrote: »

They have a very interesting £75 per £10,000 transferred ISA transfer offer (max cashback £7,500) running to 30 April 2013. Funds must be held for 18 months. So perhaps they are using this to retain investors when platform RDR comes in.

Does this mean if you are still with Cofunds through Cavendish, you can re-register to FundsNetwork through Cavendish and get the cashback, or do you need to go to Fidelity direct?

jimjames

Is there a way round this to transfer all of the ISA away from Fidelity as they require. Move it to another provider like Cavendish or HL and then move back the partial amount to Fidelity.

It would be a hassle to do but I can't see any reason why it wouldnt work.

SnowMan

talexuser wrote: »

Does this mean if you are still with Cofunds through Cavendish, you can re-register to FundsNetwork through Cavendish and get the cashback, or do you need to go to Fidelity direct?

Unfortunately not.

You have to be invested with Fidelity through Fidelity Fundsnetwork.

So you don't get the cashback invested with Cavendish through Fidelity Fundsnetwork.

talexuser

SnowMan wrote: »

Unfortunately not.

I thought it would be too good to be true

I don't see anything about 0.5% trial commission on Fidelity, so if you have to keep £100000 for 18 months, at a cashback of £750, that is the same as Cavendish discount of 0.5%, 500 in year 1 and 250 in the next 6 months....

Initial charges are the same discounts generally.

Not worth re-registering since Cavendish discount continues after 18 months - anyway until we know who are the best buys after full RDR is introduced.

SnowMan

talexuser wrote: »

I don't see anything about 0.5% trial commission on Fidelity, so if you have to keep £100000 for 18 months, at a cashback of £750, that is the same as Cavendish discount of 0.5%, 500 in year 1 and 250 in the next 6 months....

Fidelity Fundsnetwork is usually seen as the poor relation of Cavendish for direct investors because of the lack of trail commission rebate.

The Fidelity offer can work out the better option for funds that pay no or next to no trail commission such as the HSBC trackers.

But otherwise Cavendish still wins.

talexuser

So the unresolved question until RDR finally settles down remains whether the funds you have or like will be available in the "clean" versions within your wrapper, and if the up front charges for those clean funds work out cheaper than 0.5% trail back on the conventional funds assuming initial charges still discounted?

Pass the wet towel for my head