Sippdeal shocker (& link to template complaint letter)

koru

SnowMan wrote: »

Also it is brilliant to see ATS treat customers fairly with the temporary waiving of exit fees. What a complete contrast to Youinvest who have shown themselves to be an organisation who in my opinion don't treat customers fairly and simply can't be trusted.

I agree ATS deserve praise for this, although let's not forget that they did not waive exit fees last time they did a big fee hike 18 months ago.

plunt

i received my final letter from YouInvest/SIPP Deal/AJ Bell stating they will not waive any exit fees. Therefore i am going to proceed to going to the financial ombudsman. Here are the points im planning to make, and please let me know your thoughts. Keep in mind it took them nearly a month to reply to my complaint meaning the cut off date to transfer got closer and closer!

Some background

1) I only have £1100 in a SIPP with them, it is invested in ! emerging markets fund. I hold no ETF's or shares with them, and no other funds.
2) I transferred from a company pension when i left the company as they stated either i could get the full amount refunded in cash or transfer it out (was with the company for only a year)
3) SIPP deal dragged their feet and it took 3+ months to transfer to them

Points i want to make:

1) As a result of the new fees I will be paying over 2% a year in fees minimum. and due to my age (under 25) I want to point out to them that by the time i retire (if there is no growth) they would have taken roughly 60% of my pension ....
2) The transfer out fee will take a significant portion of my tiny pension pot with them. Thus forcing me to eventually give them a large amount of my pension whether I stay with them or not!
3) When signing up with them the person on the phone explicitly pointed out that the product was right for me as it had no fees and was ideal for small pensions, hence I am not stuck in this situation. I also saw plenty of advertising on their site and etc about how unique it was for them not to have annual fees! (no minimum + no annual fee!)
4) AJ Bell is hiding behind the RDR and using it as the one and only defence...

I am aware its a tiny amount, but please give me your thoughts and if there is anything obvious I have missed.

Thoughts?

Plunt

SnowMan

I've been away for a few days and got back to find my final response from Youinvest (dated 24th December).

There is nothing in the final reponse to suggest Youinvest have any defence at all.

Youinvest have tried to suggest that they have saved me money by converting my funds to clean funds and that the quadrupling of the platform charge just brings me back to my starting position. I have pointed out to the FOS that is complete nonsense. The whole basis of switching to Youinvest was to invest in clean funds. I have copied into the FOS an exchange of emails with Youinvest from before I transferred where I clarified with Youinvest that conversion to clean share classes was possible, and where I state that my sole reason to transfer was to invest in clean funds at the £50 platform charge. So it is totally clear that the contract we entered into was for clean funds at a £50pa platform charge (and not retail funds with a platform charge, why I would want to increase my charges by choosing non-clean funds who knows). So all that is happening is that they are quadrupling the platform charge.

Youinvest also imply that my clean HSBC funds are 0.15%pa cheaper than the retail class because the amc is 0.15% less and provide numbers on that basis. That is factually wrong or at the very least misleading as the OCF (TER) is only 0.1% lower on the clean classes (because there is an additional 0.05% registration charge for the clean classes only that is reflected in the OCF but not the amc). Surely Youinvest should know the difference between AMC and OCF?

That Youinvest are trying this sort of nonsense argument with nonsense figures shows a certain desperation on their part in my view.

I've posted my referral to the FOS today.

YouInvest argue that they have given ‘reasons’ stated in the contract for the price increase as their justification (it is not actually clear which specific reason they are using in my case as their letter is very vague, but possible the regulatory reason I think, albeit I was in clean funds that were explicitly charged so there is no obvious regulatory reason that applies)

However the OFT guidance OFT311 (in particular pages 52 to 58) is crystal clear that price changes (as opposed to other changes) are fundamental changes to the contract, and this isn’t a potential loophole for Youinvest to use, for example in the footnote on page 58 the OFT say, ‘note the absence of a 'valid reasons' route to fairness. The OFT does not consider that use of 'valid reasons' normally justifies price increases, essentially on grounds stated in paragraph 12.3 that is, lack of verifiability.

This is based on Schedule 2 of Unfair Terms in Consumer Contracts Regulations, UTCCR (in case it confuses the group 12 in the OFT guidance refers to the 1(l) term as (l) is the 12th letter in the alphabet) which includes within the indicative and non-exhaustive list of terms which may be regarded as unfair (and 1 (l) is referenced in the FCA guidance 3.4 also)

1 (l) providing for the price of goods to be determined at the time of delivery or allowing a seller of goods or supplier of services to increase their price without in both cases giving the consumer the corresponding right to cancel the contract if the final price is too high in relation to the price agreed when the contract was concluded;

So the starting point is that the Youinvest are at strong suspicion of having an unfair term. And the imbalance caused by a quadrupling of charges (with a 3 years of charges exit fee) is as about a great imbalance as you can conceive.

So it should be a straightforward matter for the FOS to uphold my complaint (although that is their decision to make).

SnowMan

plunt wrote: »

I am aware its a tiny amount, but please give me your thoughts and if there is anything obvious I have missed.

Thoughts?

Plunt

Good luck plunt with your complaint.

My thoughts are:

I think you should mention the UTCCR in particular that you are faced with a significant price increase that you didn't sign up for. I would quote in particular the OFT guidance OFT311 (see above) and the FSA (now FCA) unfair terms guidance.

When signing up with them the person on the phone explicitly pointed out that the product was right for me as it had no fees and was ideal for small pensions, hence I am not stuck in this situation. I also saw plenty of advertising on their site and etc about how unique it was for them not to have annual fees! (no minimum + no annual fee!)

I think that is a very strong point to make. It is an indication that Youinvest haven't treated you fairly. They are required to act fairly.


Youinvest can increase their charges but they must give you the option to leave freely (without exit charges). So it is important to think about where you are going to move to and show some intent to make that move.

plunt

appreciate the support Snowman and will use your tips and points! I am actively looking at other providers and have a few in mind. Though worried they will end up changing their structure as well (eg: HL and BestInvest)

I do think that the fact my pension in this account is extremely small may work in my favor, particularly as the government has recently made moves to encourage people to put money into a pension (eg auto enrolment). Thus i shouldnt be hurt for trying to save

Thrugelmir

plunt wrote: »

1) I only have £1100 in a SIPP with them, it is invested in ! emerging markets fund. I hold no ETF's or shares with them, and no other funds.

That is your issue not theirs. The costs of administering the account are obviously commercially uneconomic.

plunt

Thrugelmir wrote: »

That is your issue not theirs. The costs of administering the account are obviously commercially uneconomic.

fully aware that is my issue, but hence why i followed their advertising and the sole reason i chose them as a platform....

SnowMan

What is interesting in the Alliance Trust Savings announcement is their commitment to the flat fee charging.

We are committed to our transparent flat fee model as the value of the account does not change the cost of administering it. We believe percentage charging structures are simply a tax on wealth

With Charles Stanley and Cavendish having reasonable percentage based structures there is definitely a bit of choice out there, and some of my fears for those using funds of a 'cartel' of percentage based structures has gone away.

Those with smaller fund portfolios will find Charles Stanley and Cavendish as their best options (once you take into account dealing costs) whereas those with larger fund portfolios have at least one option ATS.

That leaves the half way housers for funds such as Youinvest potentially expensive, as they can be beaten on cost at the lower end by Cavendish and Charles Stanley (once you take into account dealing costs) and can be beaten at the higher amount end by fixed fee platforms such as ATS, unless a very large amount of buying and selling is going on.

When you add in the element of trust and treating customers fairly (what is to stop Youinvest trying to increase charges further, or adding in charges for ETFs etc arguing, wrongly in my view, that their terms say they can change charges to remove cross subsidies and so not waive exit fees?), that would suggest that Youinvest area are not a good option for most.

I haven't fully analysed it and there are other platforms such as Best Invest who haven't announced (HL are going to be expensive so I will exclude them).

westy22

that would suggest that Youinvest area are not a good option for most.

But they are for some - if you have a large SIPP portfolio predominantly made up of ITs, ETFs and shares then a fixed £100 pa SIPP custody fee is hard to beat equating to 0.04%pa on a £250,000 pot.

TCA

SnowMan wrote: »

I haven't fully analysed it and there are other platforms such as Best Invest who haven't announced (HL are going to be expensive so I will exclude them).

I'm with Best Invest and haven't heard or read anything about their intentions. For some reason I don't expect their pricing to change much but that's probably because I haven't invested in anything with trail commission and it all seems quite transparent. Just wish them and others would get a move on.