Calls for exit fee comparison on legacy products

In its response to the FCA’s consultation on this study, PensionBee suggested that providers could bypass the proposed ban from the regulator, as the proposals do not cover so-called product-related exit fees.

The watchdog does not, at this stage, intend to extend the proposal of a ban to product-related exit fees, which include market value reductions in with-profits policies or deferred advice fees.

PensionBee has previously called for a ban on all forms of exit fees arguing they “deter people from switching when it may be in their best interests to do so”.

Ms Savova said: “Exit fees are particularly detrimental to people with smaller pension pots and to those between the ages of 40 and 55, who have an urgent need to plan for retirement. 

“Given the evidence that few providers in the pension market would continue to disproportionately benefit from exit fees at consumers’ expense, it is baffling why the FCA would consider anything but an outright ban on all forms of exit fees.”

After an analysis of 16,271 pensions in 2018, Pension Bee concluded that exit fees occur in 4 per cent of pensions. Some 98 per cent of exit fees are under £5,000 and 49 per cent of exit fees are under £100.


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