Investors on the Alliance Trust platform will no longer have to pay exit fees, Interactive Investor has announced.
Interactive Investor acquired the Alliance Trust Savings platform at the start of July 2019, and has now said it will scrap the exit fees that both advised and non-advised clients pay, bringing them in line with Interactive Investor clients.
The exit fees are being scrapped as part of Alliance Trust Savings moving to the same platform as that used by Interactive Investor, work which the company expects to be completed by the end of September 2019.
However, the firm has been silent on the future of the advised clients on the platform. The company’s chief executive Richard Wilson said at the time of the acquisition that he was “listening” to advisers, and FTAdviser understands a review of the business is underway.
An Interactive Investor representative declined to comment further on the plans for the advised business at this time.
Interactive Investor paid £40m for the Alliance Trust Savings business, acquiring assets of £36bn and about 400,000 customers.
The Financial Conduct Authority proposed in its Investment Platforms Market Study in March 2019 to ban administrative exit fees on platforms.
The FCA defined exit fees as charges that are imposed by platforms and comparable firms on consumers, following a request to disinvest or to transfer their assets to a new service provider.
Typically, these fees take the form of a fixed cash amount or a percentage of the assets to be transferred out.
Mr Wilson said: “Throughout the FCA’s consultation period on exit fees we consistently argued that an outright ban on exit fees, applied to existing as well as future business, is the only fair thing to do.
"Exit fees restrict customer choice - capping them doesn’t solve the issues and is still a recipe for rip offs.
"By extension, banning exit fees from the get-go for our new ATS customers, and ahead of migration for direct customers, is the only right thing to do.”
Mr Wilson said in June the regulator should ensure it closes any loopholes that would allow platforms to circumvent the ban if it comes in.
He cited the specific example of firms charging an upfront fee of 5 per cent when a client joins a platform, and then rebate this money back to the client as a "loyalty bonus" of one per cent a year over subsequent years.
Mr Wilson believes that if a client leaves within five years, they may not receive all of the fee remitted, and this would have the same effect as an exit fee.
He said he wants the FCA to adapt the definition of exit fee to capture other arrangements such as these.