High exit fees are the main reason why people are not switching their pension and investment accounts, according to research by TD Direct Investing.
From a survey of 505 investors aged over 16 conducted by Censuswide, 80 per cent of said they have been discouraged from moving their accounts, with 43 per cent citing high exit fees and 37 per cent blaming the unclear switching process as the main reasons.
The findings also highlighted an increasing lack of trust, with over two thirds citing unclear rates and charges as the primary factor.
In terms of what would increase investors’ confidence in the industry, respondents said that clear rates and charges would be the most important change at 61 per cent, followed by no exit fees for switching provider at 47 per cent and unbiased guidance from DIY investment providers at 37 per cent.
Last year, a number of pension providers tried to break down the exit barrier by cutting exit fees, but they still remain a problem for many investors.
Carl Howard, commercial director at TD Direct Investing, complained that providers simply are not responding quickly enough to customers’ needs.
“Abolishing exit fees and supporting the switching process are essential to ensuring that the pension reforms the government has devised work in the best interest of UK investors and savers,” he stated.
“We took the decision to scrap exit fees, enhance our offering and simplify our rates and charges to directly benefit customers and lead the industry – but there’s more we can do too.
“However, the research shows that others in the industry run a very real risk of damaging the reputation of us all and losing the trust of the people we aim to serve.”