Sippdeal shocker (& link to template complaint letter)

malfesto

Your case highlights the lottery that a FOS complaint referral can be. I wouldn’t bother contacting your MP. The best he or she could do is table a parliamentary question to the Treasury and/or BIS.

A more constructive approach would be to enlist Citizens Advice or Which?. They have super-complainant status with the FCA. A super complaint by either of them will require a response from the FCA within 90 days. This could kick-start a thematic review by the FCA which might culminate in direct regulation. The guidance document for super complainants (FG13/1) by the FCA gives an outline of what is required.

There are a number of issues with exit charges (especially in-specie transfer out charge) in the direct to consumer platform market and the detriment it causes to consumers. Firstly, the charges inhibit existing customers from looking for the best deals and moving investments to an alternative provider. Secondly, the existence of exit charges leads service providers to concentrate on new customers. Almost no provider levies an in-specie charge for new customers transferring in investments from a competitor even though the level of admin is similar.

The varying level of exit charges in the market also looks suspicious. It looks like a move by some providers to profit from departing customers. This is legally questionable and could be challenged under UTCCR. The OFT which used to regulate consumer credit published a statement (OFT842 document) on fair default charges in credit card contracts. Some of the analysis in the document could be applied as to the level of fair exit charges.

Hope you’re successful with the campaign. I have noticed that a few national newspapers have started focusing on this issue.

Regards,

malfesto.

naedanger

malfesto wrote: »

A more constructive approach would be to enlist Citizens Advice or Which?. They have super-complainant status with the FCA. ...

That is very interesting. I think that I will write to Which since I get their magazine (never got round to cancelling a subscription). I know they have been involved in similar matters in other industries, with some success. However platform charges have less profile than utility charges, which is probably why they have not generated the same interest.

Hope you’re successful with the campaign. I have noticed that a few national newspapers have started focusing on this issue.

I too have noticed that some newspapers are starting to focus on the issue of exit charges generally. And this is good news because high exit charges risk inhibiting competition in the ways you describe.

However there is, to my mind, a much greater injustice in companies being permitted to charge these fees when it is them rather than the customer who wishes to exit from the originally agreed terms. I have not really seen any newspaper pick up on this more specific point. If they did I think they would find that the companies doing this are on shaky legal grounds. (Of course it should not require newspapers to tackle this more specific point when it is against regulatory guidance. Instead the regulatory, i.e. the FCA, should take action to ensure companies comply with regulatory guidance.)

SnowMan

malfesto wrote: »

A more constructive approach would be to enlist Citizens Advice or Which?. They have super-complainant status with the FCA.

With my CAB adviser hat on I'm not sure we are best placed to make a super-complaint on this one.

But which? is an interesting suggestion that I hadn't thought of.

colinmb

Just received an email from Sippdeal notifying me of the charges they're going to hit me with at the end of this month. I couldn't understand what these charges were about as I haven't noticed any correspondence from them about any new charges. So the email prompted me to look around and I see that Sippdeal sent out an email in November telling clients about the forthcoming new charges and giving them the option of quitting. Not sure what the email really says as I've not seen it. And I found this thread. Not read all of it but get the general idea. Before I saw the thread I'd phoned Sippdeal and followed up with an email basically saying that I've not had any prior notification about these new charges and that I don't accept the implied contractual changes and would they care to confirm that they will suspend the charges and allow me to transfer out without any selling or exit fees. The charges are particularly an issue for me as there's no cash on my account (there was never any need to leave idle cash on the account). They haven't even bothered to reply. Scanning through the thread I'm getting the feeling there's little hope. I'd be grateful if anyone would care to sum up the situation for me.

JasonPr

colinmb wrote: »

I'd be grateful if anyone would care to sum up the situation for me.

Yes, they won't waive exit fees.

You can find the fees here: http://www.youinvest.co.uk/Sipp/ChargesandRates/

Basically, there's a SIPP custody charge now (£25 per quarter if account above £20,000) and a fund charge (0.20% per annum (maximum £50 per quarter).

JasonPr

SnowMan, any update from you?

SnowMan

JasonPr wrote: »

SnowMan, any update from you?

My complaint is going to an Ombudsman which could take a year, but I have no confidence in a proper assessment being made.

The Financial Conduct Authority have been pretty useless also. They've refused to clarify how UTCCR Schedule 2 para 1 (l) applies. I asked if they agreed with the OFT's view that there is not a valid reason route to fairness in the event of a price increase but their response is

We cannot comment on this as it is not for the FCA to comment on information provided by another organisation.

They have given no view what their own opinion is!

Of course it is this sort of weak, unclear and ineffective regulation that causes significant customer detriment. It is not good for good financial firms either as they have no clarity on how they should operate, and the rogue firms can get away with all sorts.

By contrast the OFT have very clear guidance on how they view the UTCCR (Unfair Terms in Consumer Contract Regulations) and have separate documents with info for individual industries

The FCAs only document from 2012 pretty much just covers unilateral changes.

However the industry has moved on and the rogue companies are inserting terms saying they can increase charges for all manner of reasons without giving customers a free exit. This enables them to advertise low charging structures that they have no intention to maintain, jack up charges and you have to either stay or get hit through the nose with exit charges. While the UTCCR says this shouldn't happen and there isn't a valid reason route to fairness, if the regulators and assessors of financial complaints ignore the UTCCR then financial companies will try it on.

Failure to enforce the UTCCR only seems to be a problem in the financial services industry because of the weak regulation by the FCA and the lack of proper assessment at the Financial Ombudsman Service.

Hopefully I will have the energy to take this one through the county court via the small claims track although that is perhaps a year away.

BLB53

Basically, there's a SIPP custody charge now (£25 per quarter if account above £20,000) and a fund charge (0.20% per annum (maximum £50 per quarter).

I can sort of understand the 0.2% fund charge as it compensates for the hidden commissions paid to the platforms prior to RDR. I'm not really sure what the extra 'custody charge' is supposed to cover - maybe just a little extra fees for the platform provider from those customers who would find it more difficult to move?

I see there is no equivalent 'custody charge' for ISA and dealing accounts which seems a bit strange?

bowlhead99

Good on you for sticking with it Snowman.

I mentioned early on in the thread that I was a customer and staying with them for the timebeing, as the new fees work OK for me.

That's still the case, and I suppose there will be relatively few (in the grand scheme of things) who will have faced the same percentage increases as you did - or at least, few who notice, or few who had even done their homework properly to know exactly why they wanted to use Sippdeal in the first place as the best place for their money and why the changes blew that apart for a particular type of holding.

I look forward to hearing the outcome at some point in the next year or so.

Meanwhile the message essentially seems to be:

- if you sign a contract with any company and it has fees, don't assume they will stay the same forever, especially if the contract even hints that they might change.

- if you sign a contract with exit fees, don't assume they'll waive them when they do something to annoy you (like changing the fees) or when a competitor does something to befriend you (like coming up with a better product or price). The whole purpose of exit fees is to stop customers getting away when those customers would otherwise have liked to get away.

Your rights as a consumer may well, in theory, trump the contract clauses. But the company having written the contract clauses for their own benefit will inevitably disagree with that, so it could take you a year or more to find someone who will enforce your rights for you, if at all.

This makes it pretty tricky to pick providers. All you can do is go off the history of how the various rivals handled previous price changes. Like most things in the investment world, past performance does not guarantee future performance; even someone who gave a fee waiver once or twice will not necessarily offer it every time in every scenario unless they feel that on balance they will gain business from being seen as the good guys, and retain the type of business they want to retain. And of course, the type of business a company wants to retain, might also change over time.

So, best buy tables and price comparison tools are useful, but all we have to help us make long term decisions on where those prices might go, are are name-and-shame threads like these. Can you imagine trying to get this type of information to make smart decisions, 20+ years ago, pre internet? Praise the internet!

Snowman I hope you do get the outcome you want eventually, as despite the fact it will cost me somehow (as a current customer who gives them the income to pay their expenses), this is clearly not one of those threads where someone just wants to have a bit of a moan and cash in on compensation culture.

Financial_Saddler

Good luck with your perserverance Snowman.
I'm a generally happy customer of Sippdeal. My portfolio with them consists exclusively of Investment Trusts - the introduction of a £100 custody fee was something I was willing to swallow, particularly as, compared to HL, they still looked a very reasonable option.
I suppose it's swings and roundabouts with them. Their exit charges are ridiculous and what seems to be the lack of a dividend reinvestment option is odd. However, the website does its job well enough, communication has always been good for me, dealing charges are OK, and drawdown charges currently look competitive.
It may at some point be worthwhile opening a new thread to discuss whether Invstment Trust charges are becoming uncompetitive following RDR. Over 2% on Graphite is a right pain!