Fidelity has called for an outright ban on service providers charging exit fees on investments held when switching providers. The company believes investors are typically not initially aware of exit fees levied by some providers, which can act as a significant barrier to switching providers in the future. Fidelity is currently covering the costs of any exit fees for those who switch to its platform, but would like to see a ban on exit fees altogether:
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.”