24th March 2014

Fidelity personal investing calls for ban on exit fees

Fidelity Personal Investing is calling for an outright ban on the charging of exit fees from all long term savings products. Fidelity believes exit fees create a barrier to customers moving assets between providers, due to the significant charges being applied.

This move follows the recent spate of pricing announcements from a range of investment providers which has highlighted the significant adoption of exit charges across the industry, as well as a range of other additional charges.   Fidelity believes that an outright ban on exit fees will help improve competition within the market place, and provide customers with better choices.

In 2013, the FCA introduced regulation to enforce the easy movement of clients’ assets between providers. Since then significant automation has been put in place to ensure this can be done in a timely and cost effective manner. Despite this now being widely adopted by the market, these charges have not come down.

Fidelity has been actively lobbying the FCA on changing the rules. In the meantime, it will continue to cover the costs of any personal investing customer who incurs an exit fee when moving assets to Fidelity**.

Mark Till, Head of Personal Investing at Fidelity Worldwide Investment, comments; “When a customer first takes out an investment product, they don’t always consider the cost of exiting the service at some point in the future. Many companies lead with a simple headline rate, which does not make it clear the possible impact of charges if the customer wants to move their assets to another provider.

“Fidelity’s approach has been to avoid these structures as we see them as being a barrier to exit. We believe that only by providing an exceptional service will the customer look to retain their assets with Fidelity. However, for the typical ISA investor this year, we are seeing some of our competitors levy exit charges that amount to in excess of 1% of their portfolio value. This can add significantly to the headline cost being quoted by a provider. Customers are now telling us this is becoming a material issue for them when they look to move between providers. Not only are charges high, but the mechanisms for collecting these fees are creating further delays in transfers.

Till continues: “We would like to see an outright ban on these types of charges, as we believe they are creating meaningful barriers to customers moving assets.   We continue to talk to the FCA on this matter. Hitting customers with additional charges can make a significant dent in an investors’ saving pot over the long run, something that is too often not taken into account, and we believe that exit fees should be banned from long term savings products. Until we see a ban on these charges we will offer to refund the cost of these charges to customers who move assets to Fidelity.”

Fidelity Personal Investing has designed its new pricing with simplicity in mind so that its customers will know the cost of investing up front. The ONLY costs they will have to think about when they come to Fidelity are the fund price and the annual platform charge - there will be NO additional charges. 

Why Fidelity?

• NO exit fees – we believe investors should be able to choose where they invest, and move if they want to, without penalty
• NO additional charge for phone or paper dealing – we want our customers to deal with us in whatever way suits their needs best. Our service is available online, by phone or by post and it will cost the same whichever they choose.
• NO charges for unexpected events – no one wants to think about divorce but it can be expensive when it happens. Life is hard enough, we’re not going to make it any harder for our customers by hitting them with an extra fee for splitting their assets.

Fidelity’s analysis of its main competitors shows the significant cost that can be incurred by customers as a result of exit fees***:

About Fidelity****

• Fidelity Worldwide Investment has over 45 years of experience investing for institutions and individuals
• Our clients have entrusted us with over £160 billion of their investments
• This includes £44.5 billion for over one million investors in the UK
• Our team of 350 investment professionals in 13 countries is responsible for managing 600 actively-managed funds across all sectors, regions and asset classes
• Fidelity Personal Investing offers a range of options to help customers in their investment decisions, including a range of multi-asset funds, model portfolios and an open architecture Select List of 140 funds.  These 140 funds have been chosen by our teams of experts from our range of over 2,000 investment options which aim to provide the best outcomes for our customers in the long term.

Investments, Regulation