Legal and General  

L&G shareholders lose investment benefits in Fidelity deal

L&G shareholders lose investment benefits in Fidelity deal
 Credit: Chris Ratcliffe/Bloomberg

Legal & General shareholders are to lose their investment benefits later this month as the retail business transfers to Fidelity.

In a letter seen by FTAdviser, shareholders were told L&G would be unable to continue to offer the enhanced terms previously available to its staff and shareholders once the administration was sold and would cease to exist from February 26.

Such advantages included a 1 per cent cash-back on stocks and shares Isas and an extra allocation of units in its range of unit trusts.

L&G said following the deal retail investors, shareholders and staff would be treated equally.

An L&G spokesperson said: “These preferential terms were always subject to variation and were naturally contingent on this business being part of LGIM.

“Going forward, with a change of ownership to Fidelity, we expect all customers to be treated equally. 

“Once that transfer happens, customers will have the benefit of investing in stocks and shares Isas and investment accounts powered by the full capability of Fidelity’s investment and pension platform, as well as the LGIM investment expertise that they chose — which will remain unaffected.”

One shareholder described L&G’s sale of the retail arm as a “disgrace”, and complained that L&G had shared limited information about the transaction apart from the letter stating their benefits would be lost.

He added: “When I raised a complaint with L&G they fobbed me off, saying the terms and conditions would be better. But now it is coming to light that customers who are shareholders will not be better off at all. In fact, worse off.”

Fidelity announced in October last year it had bought LGIM’s personal investing arm, which comprises almost 300,000 customers and £5.8bn assets under management, to form part of its own D2C platform Personal Investing.

The retail investments included in the deal — primarily legacy Isa, Junior Isa and GIA products — will remain invested in LGIM funds post-deal.

At the time, LGIM said the deal gave customers the “best of Fidelity’s large scale administration” alongside the “LGIM investment expertise they chose” while Fidelity pledged that customers transferred to its platform would pay the same or less than they do with LGIM.

The buyout followed Fidelity’s acquisition of Cavendish Online, which is also set to form part of the D2C platform as Fidelity eyes growth in the UK direct investment market.

Following both deals, Fidelity’s personal investing arm will boast around 600,000 customers and £26bn of assets.

imogen.tew@ft.com

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