Leaving HL without transfer charges

lejog2003

SnowMan wrote: »

Here is a template you could use:


Dear sir or madam

Complaint

<snip>

{note if the re-registration charges of £25 per fund + £75 for SIPPs represent a multiple of your existing annual platform charge, such as 3 times your current annual charge, then you might want to mention that also here}

Thanks for this, a small point that according to my reading of the current charges there is a flat £75 transfer charge for SIPPs, no reregistration fees. I'm not allowed to post links, so they are here - hl.co.uk/pensions/sipp/charges-and-interest-rates.

SnowMan

lejog2003 wrote: »

Thanks for this, a small point that according to my reading of the current charges there is a flat £75 transfer charge for SIPPs, no reregistration fees. I'm not allowed to post links, so they are here - hl.co.uk/pensions/sipp/charges-and-interest-rates.

Thanks. Amended.

masonic

lejog2003 wrote: »

Thanks for this, a small point that according to my reading of the current charges there is a flat £75 transfer charge for SIPPs, no reregistration fees. I'm not allowed to post links, so they are here - hl.co.uk/pensions/sipp/charges-and-interest-rates.

That will also explain why you didn't get notified of the fee changes in January 2013 if they didn't apply them to SIPPs. Presumably the £75 fee has been around for longer.

gterr

masonic wrote: »

I'm more than happy to collaborate when it comes to the wording of the complaint and FOS claim.

Thank you Snowman and Masonic, and, yes please Masonic, if this does go to the FOS I'd be grateful to collaborate on wording.

juliamarsh

cepheus wrote: »

Is it worth mentioning the current transfer fees and changes in the header post? I think this is correct, but it's a bit of a dogs dinner finding out the entire story. Seems it might be best to change SIPPs after 2nd June, although it's still unclear if the SIPP charge is waived altogether or reduced to same as ISA. Quote:
Current Charges

ISA

Account closure fee No charge
Transfer out (as cash) No charge
Transfer out (as stock) £25 per holding

SIPP

Transfer out to a UK scheme £75
(This fee will be removed on 2 June 2014.)

New charges changes in addition to above fees

Account closure fee £25 +VAT
(This fee does not apply to closing an account to transfer between a SIPP, Group SIPP and Drawdown. For all other accounts it will be introduced on 2 June 2014.)

Cash transfer out to another provider £25
(This fee will apply to all cash transfers to other providers from 2 June 2014.)

It won't be cheaper to transfer out of the SIPP after 2nd June, unless you transfer as cash - at the moment there is a flat fee of £75, after 2nd June 2014 it will cost you £25 per stock, so if you hold more than 3 funds in your SIPP it will cost you more.

jamesd

KTF wrote: »

Looking at the new fees, I cant work out if I will be better or worse off. Is there an easy way or working this out and if I will be worse off, who should I move it to to avoid any more fees?

Not too hard to find out what you're paying now, just follow the instructions in this post.

Nobody outside HL knows what their charges are going to be yet because they won't announce them until 1 March, the day they take effect.

SnowMan

masonic wrote: »

The change is not for a valid reason because there were other ways HL could become RDR compliant without changing the fee on trackers (i.e. charge on all holdings at £2 per month). HL have conflated a regulatory change with a price increase for trackers.

Yes I agree with your line of argument. I didn't word my previous response very well. And this is why the increase for someone with Vanguard trackers is not for a regulatory reason.

So for someone in non-commission paying funds already the reason for the increase is either unilteral or if HL are arguing that is for a reason stated in their terms and conditions.

to reflect the way that our services are used and ensure that the costs of those services are allocated fairly among our clients

And that is where the lack of a valid reasons route to fairness kicks in. It says in 4.3

A price variation clause is not necessarily fair just because is not discretionary – for example, a right to increase prices to cover increased costs experienced by the supplier. Suppliers are much better able to anticipate and control changes in their own costs than consumers can possibly be. In any case, such a clause is particularly open to abuse, because consumers can have no reasonable certainty that the increases imposed on them actually match net cost increases.

That is the example the OFT gave but they could have easily have given this example to explain why a term of the allocation of cost nature above couldn't be used to fairly justify a price increase (I am talking generally here about that term not about this specific situation)

A supplier could deliberately subsidise a category of customer to attract in new business, hook them in, then increase charges for them, and charge those customers the earth to leave. The supplier might say 'we are increasing charges to remove the cross-subsidy which our terms say we can do'. Suppliers are much better able to identify cross subsidies than consumers and to know when those cross-subsidies will be removed. And so such a clause is particularly open to abuse.


The guidance in 12.4 then goes to explain how companies can achieve a flexibility of pricing. However none of those apply here in particular because exit fees aren't being waived.


Hope that's a bit clearer this time

masonic

I've tried to gather up the various arguments discussed in this thread and assemble them into one coherent letter of complaint (with thanks to Snowman for putting forward several of the relevant arguments). I would welcome any feedback/improvements and I'm happy for people to make use of it as they see fit - however, please note it has been tailored to my circumstances, so it will need some adjustments.

***
In your letter dated 15th January 2014, you notified me that you were removing the existing £24 per year per holding platform charge for investments that do not pay trail commission and replacing it with a new 0.45% fee based on the value of each holding. Following this notification, I contacted you on 18th January stating I did not wish to accept the unilateral variation of the terms and conditions. I requested the opportunity to dissolve the contract free of exit charges (specifically the charge for transferring my holdings to another provider as stock), but you infomed me that you "would not be waiving any transfer fees".

I therefore believe that you are in breach of the Unfair Terms in Consumer Contracts Regulations 1999 (UTCCR), The Office of Fair Trading's 'OFT311: Unfair contract terms guidance' of September 2008 (OFT guidance) and the Financial Services Authority's, now Financial Conduct Authority's, Finalised guidance 'Unfair contract terms: improving standards in consumer contracts' of January 2012 (FSA guidance).

Section 5(1) of the UTCCR states "A contractual term which had not been individually negotiated shall be regarded as unfair if, contrary to the requirements of good faith, it causes a significant imbalance in the parties’ right and obligations arising under the contract, to the detriment of the consumer". I contend that an increase in the annual fee I am paying on a proportion of my holdings (making up XX% of my total holdings) from £XX per year to £XX per year (at current valuation) represents a significant imbalance in my obligations arising under the contract.

Schedule 2 of the UTCCR provides an indicative list of terms in a contract which may be regarded as unfair. Paragraph 1(l) states one of these terms as "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".

You stated in your message to me on 18th January that you believe you have a valid reason which is specified in the contract for making the changes, namely "the new rules introduced by the FCA, which specify that all fund holdings must be subject to the same platform charge". Under the FSA guidance 3.5(i), this would mean that a unilateral variation of the terms of the contract is considered less likely to be unfair. However, on 31st December 2011, you introduced a platform charge of £2 per month per holding for a subset of holdings. It is therefore reasonable to consider this your standard platform charge, which you have subsequently increased for other reasons. That is to say the new FCA rules did not prescribe that you increase this pre-existing charge (for example, the same £2 per month charge could be applied to all fund holdings). I therefore believe you have confounded the regulatory requirements with a separate, commercial decision you have taken to change the basis of the charge.

The OFT guidance also comments on the UTCCR paragraph 1(l). In section 12.4, it states the ways in which a degree of flexibility in pricing may be achieved and explicitly states in a corresponding footnote, "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".

Furthermore, it should be noted that the 'valid reasons' clauses were only introduced into the contract in January 2013 and at that time I was not allowed the opportunity to dissolve the contract. Therefore, in effect the changes between 2013-2014 represent a unilateral change to the original contract without allowing me a free exit (via a two step change made in quick succession).

When a valid reason cannot be used to justify the fairness of a price increase, both the FSA and OFT guidance give alternative ways to achieve fairness. The FSA guidance states "for a contract of indeterminate duration, the contract provides for the firm to give the consumer reasonable notice in advance of making the change and the consumer is free to dissolve the contract" (Section 3.5(iii), and the OFT guidance states "Any kind of variation clause may in principle be fair if consumers are free to escape its effects by ending the contract" (Section 12.4).

The FSA guidance states in section 3.15 that "we would not regard consumers as being free to dissolve the contract if the terms did not provide that any exit charges would be waived to remove financial barriers to exiting the contract". I contend that the charge for transferring my holdings to another provider as stock is one such exit charge. It is worth noting that in a recent adjudication in August 2013, the Financial Ombudsman Service stated that "In my opinion, the use of the words 'any exit charges' implies that incidental expenses incurred in any event upon exit of the agreement, whether in the form of closure fees, 'in specie' or 'cash' transfer fees are not excluded" (Ref: 1398-5749/GS/IV26).

Regardless of the fairness of the transfer fee, it represents a financial barrier to exiting the contract and I believe it acts as a deterrent to my dissolution of the contract. Although I am aware I could exit the contract without incurring any fees by liquidating my holdings, this may be even more detrimental as the price of my holdings could increase significantly during the between liquidating and repurchasing the assets. I am therefore requesting again that these fees be waived.
***

lejog2003

masonic wrote: »

That will also explain why you didn't get notified of the fee changes in January 2013 if they didn't apply them to SIPPs. Presumably the £75 fee has been around for longer.

Yes, it has - I now see that we were talking at odds. I was talking about the change in ts&cs that changed the variation rules, which I believed in my case was the first of the two step process to change the ts&cs. Does this argument still sound reasonable for SIPP holders, even if the fees are ubchanged?

If anyone is interested a copy of the ts&cs marked up with the changes made may be found at hl.co.uk/newterms

masonic

lejog2003 wrote: »

Yes, it has - I now see that we were talking at odds. I was talking about the change in ts&cs that changed the variation rules, which I believed in my case was the first of the two step process to change the ts&cs. Does this argument still sound reasonable for SIPP holders, even if the fees are ubchanged?

It is nice to be able to say the exit fee is new, but it doesn't make a lot of difference as you can still argue it is an unfair barrier to exit when other unfair changes are made, even if it was always there. Just cite the FSA guidance that "we would not regard consumers as being free to dissolve the contract if the terms did not provide that any exit charges would be waived to remove financial barriers to exiting the contract."

The two step change argument could still be used, but the most important argument is that price increases, even for so called valid reasons, should be accompanied by the right to dissolve the contract.