Insurance company LV has today (19 December) confirmed it will scrap exit fees on all of its pension products.
The announcement, which takes immediate effect, came five months after the mutual promised to make such a change by the end of the year.
It also came a month after the Financial Conduct Authority announced it would introduce a 1 per cent cap on exit fees on existing pension contracts, and an outright ban on exit fees on new contracts.
The FCA's new regime will come into effect in April 2017.
LV's decision to scrap all exit fees with immediate effect means it is going further than the FCA requirements.
The firm said the decision would allow customers "to switch to another product or provider if they wish without incurring a charge".
“Shopping around at retirement is vital to ensure consumers get a good deal, but excessive exit charges can prevent people from doing so," John Perks, managing director of retirement solutions at LV, said.
"As a modern mutual, we are committed to ensuring our members have access to good value, transparent products that enable them to get the best outcome for their needs in retirement,” he said.
By scrapping exit fees, LV is following the lead of Prudential, which removed all exit fees in March. Scottish Widows also removed all exit fees on its workplace pensions.
Old Mutual, meanwhile, pre-empted the FCA's 1 per cent charge cap in the fourth quarter of 2016.
The exit fee cap is expected to hit closed book specialists particularly hard, as they do not have new business to offset losses that may arise from policyholders switching providers.
Closed book life company Phoenix told FTAdviser last month that around 70,000 policyholders over the age of 55 were in policies with an exit charge above 1 per cent.
However, the firm said its business model did not rely on high exit charges.
james.fernyhough@ft.com
