Platforms hit by axing of exit fees revealed

Platforms hit by axing of exit fees revealed

Platforms with potentially the most to lose from an abolition of platform exit fees have been revealed.

The Financial Conduct Authority (FCA) this morning (March 14) announced it is to consult on banning or restricting exit fees charged by platforms to clients wishing to leave.

According to data supplied by the Lang Cat (below), the James Hay modular plan has the highest transfer fee out for a Sipp, at £150 plus VAT, and its charge for an Isa transfer is £50, which is the second highest exit fee for an Isa.

A spokesman for James Hay said: "When comparing platforms, all charges should be considered and not just closure fees in isolation. We have stand-alone closure fees as part of our charging proposition, as compared to combining them with other charges.

"Closure fees are not unique to the platform industry, and if properly disclosed and proportionate to the administration costs for closing an account then we don't see it as necessary to ban these fees."

Alliance Trust Savings charges 1 per cent for a Sipp transfer, to a maximum of £150, and no charge for those aged 55-plus.

According to the researchers Lang Cat, as of March 13, the greatest exit fee for an Isa levied was by Alliance Trust Savings, at £100.

Alliance Trust, subject to regulatory approval, is currently being sold to Interactive Investor, which does not levy any exit charges.

A spokesman of Alliance Trust Savings said: "As a flat fee provider we are somewhat different to those platforms charging on a percentage of fund value basis. All our charges are fixed, fair and explicit.

"We do not attempt to hide charges by building the cost of certain transactions into an ongoing percentage fee as some others may do. We simply charge a small amount for those transactions that incur a cost.

"This way we are able to ensure that those customers who do not make those transactions do not share in those costs. We have already been in discussion about our fees in light of the FCA's previous statements and look forward to continuing that constructive dialogue through the consultation."

The FCA has asked the industry for their views on how an exit fee should be defined plus whether there should be a ban or a cap on such fees.

The deadline for responses is June 14.

According to Lang Cat, the majority of platforms do not charge for transferring individual shares, among those that do, the cheapest is Selftrade, at £15, while a range of platforms charge £25 for this service, and none charge more than this.

According to the Lang Cat, Hargreaves Lansdown charges £25 to transfer from Isas, Sipps and individual shares.

When asked what impact a ban on exit fees could have on the Bristol-based business, Danny Cox, head of communications at Hargreaves Lansdown, said: "Hargreaves Lansdown receives far more transfers in that out, so alongside consumers, we will benefit from improvements to the transfer process."