You are here: Home - Investing - Experienced Investor - News -

D2C platforms under fire over ‘punitive’ exit fees

0
Written by:
18/11/2014
Investors wishing to move from direct-to-consumer to adviser platforms face “punitive” exit fees, according to analysis by the lang cat.

Close to half of the D2C platforms researched by the platform consultancy charged some form of exit fee for ISA transfers, while 87 per cent did so for self-invested personal pensions (SIPPs). More than half also charged for stock transfers.

By contrast, just 13 per cent of adviser platforms levied exit fees for ISA transfers and stock transfers, and only a third charged for SIPPs.

Lang cat research manager Steven Nelson said: “There is a lot of industry focus on things like super clean share classes and discounted fees. But, on average, that makes up a fraction of any portfolio, whereas the exit fees can be large.”

Such fees undermine the freedom of choice platforms are supposed to offer, he suggested: “Exit fees should not be punitive. You can maybe see the argument for a few pounds to justify the administrative costs, but platforms are meant to be technological solutions.”

The lang cat research is based on quoted fees from platforms, and does not discount the fact other platforms may be charging undisclosed fees.

Alliance Trust requires £100 to transfer an ISA, while D2C platforms Barclays Stockbrokers, James Hay, and TD Direct all charge £50. Barclays charges the most per stock transfer, at £30.

Platform giant Hargreaves Lansdown is also among those charging exit fees, with its D2C platform charging a £25 exit fee on both SIPPs and ISAs, and a £25 fee per stock transfer. Up-and-coming rival Nutmeg charges between £0 and £40 exit fees for ISAs depending on the speed of withdrawal.

Chelsea Financial Services managing director Darius McDermott has called for exit fees to be banned.

He said: “We are in the D2C space but we do not charges exit fees. I just cannot see any justification for it being more prevalent in the D2C market than the adviser market.”

He questioned why platforms felt the need to erect barriers to prevent clients leaving.

 “There is going to be the odd client who has moved on but, over a long period of time, you should be able to lose the odd one or two. If the client wants to leave, why should they have to pay to get off a platform to pay for another platform?”

Charles Stanley Direct’s head of investment research Ben Yearsley said exit fees are a “legitimate charge” but added the fee must be fair.

“It is a necessary evil, but the likely question is ‘what is a fair charge?’ What you do not want is people slipping from one platform to the next to get the best short-term deal.”

exit-fees

Related Posts

Tag Box

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

The savings accounts paying the most interest

If one of your jobs this month is to get your finances in order, moving your savings to a higher paying deal i...

Coronavirus and your finances: what help can you get?

News and updates on everything to do with coronavirus and your personal finances.

Everything you need to know about being furloughed

If you’ve been ‘furloughed’ by your company, here’s what it means…

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week

Read previous post:
REVEALED: October’s top-selling funds

October saw equities triumph over debt and income remain a core investor objective according to The Share Centre. See which...

Close