FCA plans to ban investment platform exit fees

talexuser

https://www.theguardian.com/money/2019/mar/14/fca-plans-clampdown-on-investment-platform-exit-fees

Hargreaves and AJ Bell would obviously be affected in the eventuality, also such as St James Place also according to the article.

Alexland

I did write to the FCA platform study group in August 2017 with exactly this feedback:

Are exit charges imposed by companies such as Hargreaves Lansdown and AJ Bell harming competition? These charges are usually in the small print and for retail investors with small account balances such fees can make it totally uneconomic to change provider. If exit fees were imposed on more mainstream retail financial services would that be acceptable? It it also acceptable that the provider can unexpectedly increase the exit charges without serving any notice or seeking the agreement of the affected consumer? Surely the administration costs of the account (opening, transfer in/out and closing) should be covered by the ongoing charges so the provider has an incentive to deliver a high quality good value service to retain the customer?

Alex

LHW99

Unfortunately things being what they are it would probably mean companies making an increase in annual fees.

londoninvestor

talexuser wrote: »

also such as St James Place also according to the article.

I wonder if it will ban SJP's trick of front-loading fees so that effectively several years' worth of annual fees are paid at the outset of the investment, deterring you from early exit.

dunstonh

SJP dont operate a platform. So, it will be interesting to see if they are brought in line.

Strange how minor things like this which only impact on a small number of platforms make the headlines or take FCA effort but not all the big things.

masonic

LHW99 wrote: »

Unfortunately things being what they are it would probably mean companies making an increase in annual fees.

Yes, I suppose they could hike their fees and pay an annual rebate to loyal customers who have stuck around at the end of each year.

jaybeetoo

LHW99 wrote: »

Unfortunately things being what they are it would probably mean companies making an increase in annual fees.

If these platforms increase their fees then you can move to another (cheaper) platform for free!

fun4everyone

dunstonh wrote: »

Strange how minor things like this which only impact on a small number of platforms make the headlines or take FCA effort but not all the big things.

Unfortunately seems pretty standard for regulators in the UK.

talexuser

LHW99 wrote: »

Unfortunately things being what they are it would probably mean companies making an increase in annual fees.

Possibly, but II say that transferring a stock only costs about a £ per investment, so the average cost across the platform to them is quite small, and it does seem like a cash cow disincentive that needs addressing. The worst is Bell increasing fees without any get out - a clear case of breach of contract as far as I can see, with unfair conditions that they sign you up with the ability to do it. An irony is Hargreaves saying they welcome the move - so why not do it themselves?

masonic

talexuser wrote: »

An irony is Hargreaves saying they welcome the move - so why not do it themselves?

I missed that part, I remember it was only after I pointed out I'd be complaining to the FOS that they agreed to waive my exit fees when they hiked their platform fees without giving clients a free exit.

LHW99

If these platforms increase their fees then you can move to another (cheaper) platform for free!

The worst is Bell increasing fees without any get out - a clear case of breach of contract as far as I can see, with unfair conditions that they sign you up with the ability to do it.

Yep, encountered that too, hence in the end moved away and swallowed the exit fees.