FCA urged to be wary of exit fee 'loopholes'

Mike Barrett, consulting director at the Lang Cat, said platform exit fees should be banned, and that the reason often cited by platforms for levying such fees was not valid.

He said: "Many platforms say they levy exit fees because there is an administrative cost, and if they don’t charge a fee to a client leaving a platform, then the clients that remain on the platform must bear the cost of those that are leaving.

"But I don’t agree with that, because all clients leave eventually so it evens out."

Mr Wilson said: "Whilst we acknowledge that there are administrative costs associated with account closure and/or transfers, in relative terms these are inconsequential.

"We stopped applying exit fees in late-2017 and formally removed them from the ‘Rate Card’ in late-2018. We have not implemented any new charges to ‘recover’ this income."

Ben Hammond, consultant at Altus, said the key must be for platforms to be transparent about what charges are for, and not to try to disguise exit fees by labelling as product fees.