Millions of ISA and pension holders are paying additional fees of up to 1.5 per cent a year for “active management”, on the basis that a professional investor will work to generate increased returns for them. However, analysts believe that at least one in three are being short-changed, with fund managers simply offering standard FTSE ‘tracker’ returns.

‘Tracker’ funds are computerised to mimic the movement of stockmarkets. These funds generally cost 0.5 per cent annually to enter. The FCA has now announced that it intends to investigate; if the practice is found to be misleading or improper, the Authority will move to ban it.

The news has been welcomed by many industry commentators. “If you define fraud as the use of false representations to gain an unjust advantage, this is fraud on an industrial scale,” said Gina Miller of True and Fair, a lobbying group arguing for transparency in pricing. “Yet, no one has been investigated, let alone charged or faced prosecution.” Miller said her group’s in-house research suggests that savers “lose roughly £3bn” every five years as a result.

Justin Modray, owner of Candid Financial Advice, said that savers “have been paying over the odds for years on these funds, which are an utter waste of space.” He noted that “in many cases the people running the investments are doing nothing more than a dumb machine” to increase savers’ funds. “There is no expertise involved whatsoever.”

The FCA note that while some banks have stopped offering the service to new customers, a large number of existing customers continue to pay their annual fee – and funds containing billions still operate. For instance, Halifax UK Growth holds £5bn of savers’ money, and Scottish Widows UK Growth holds £3bn – both funds offer returns similar to those offered by FTSE trackers.