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New data from Fidelity International suggested retail investors in tracker funds could save approximately £45m in total charges annually if more companies cut annual management charges.

Gary Shaughnessy, managing director of DC and retail business at Fidelity, said many people were paying too much for passive funds, belying common conceptions they were low cost.

Shaughnessy said a number of investors who were unable to access new low-cost products because of high minimum investment levels may be paying too much.

"Tracker funds should be good value and accessible to all investors, not just the wealthy," he added.

An analysis by Fidelity found that three-quarters of UK tracker providers still charge total costs of 0.5 per cent or more.

Shaughnessy said: "Index funds don't add value in the way active funds do and should be bought primarily on price, tracking error and the commitment of the company running them.

"There is no reason for fund companies to charge upwards of 0.5 per cent on these funds, let alone levy an initial charge as well."

Questions over fees charged on passive funds have been raised increasingly since the entry into the retail market of US mutual fund giant Vanguard, which has promised to import its low-fee culture to the UK.

Although initial minimum investment in the company's 11 retail funds starts at £100,000, limiting accessibility to the range for many investors, Vanguard has pledged to launch the funds on a number of platforms to improve accessibility for IFAs.

But Peter Hicks, head of UK retail sales at Fidelity, said its FundsNetwork had not been approached by Vanguard, nor had it seen any demand from advisers.

Vanguard's entry has also prompted HSBC Global Asset Management to cut charges on its range of seven passive funds.