Responding to calls by Hargreaves Lansdown for the government to put pressure on providers to stop selling financial products with significant exit fees attached, the chief executive of advisory portal Panacea Adviser said the practice was part of a legitimate process for businesses.
He said: “It seems to have been forgotten that these businesses are not charities. We need to remember that all providers run a business, and this business has to make profits to satisfy shareholders and continue to exist.”
Mr Bradley called for exit fees to be transparent and easy to understand, but said they must also reflect an element of the loss sustained by the business.
He said: “We are entering an age when the all-powerful consumer has rights which sit way above any commercial considerations of the business from whom they have chosen to withdraw from a contractual agreement. We are in danger of seeing that balance manipulated to such an extent that the consumer is in a no-lose situation.”
Last year, pensions minister Steve Webb warned providers against further damage to their already “battered” reputations over historic exit charges which often swallowed up as much as 20 per cent of a pension’s value when a customer switched to better-performing schemes. Hargreaves Lansdown’s head of pension research, Tom McPhail, claimed some providers were still levying big charges despite the warning.
Hargreaves Lansdown’s head of pension research Tom McPhail claimed that some providers were still levying big charges despite the warning.
Alistair Cunningham, director at Surrey-based Wingate Financial Planning, said: “I still have pre-RDR contracts with exit penalties, but it’s not really an issue for me with new business.”