The Financial Conduct Authority (FCA) has expressed concern on exit fees levied on wealth services, according to the Sunday Times.
The regulator’s worry, which also extends to fund supermarkets, comes amid concerns of the thousands of pounds investors are being asked to fork out to change the wealth provider.
The newspaper used St James’s Place, which charges a 6% transfer fee based on assets held on moves within a year, as an example of how expensive this can get.
On a £500,000 portfolio this would equate to £30,000. The fee falls to 5% on transfers within two years and is cancelled if a client remains with the firm for six years.
Bestinvest and Brewin Dolphin also impose exit charges and Hargreaves Lansdown charges £25 on each exit, while the likes of Standard Life Wealth do not levy a fee.
The FCA told the Sunday Times: ‘We are keeping an eye on exit fees. We expect them to be proportionate to the cost of actually exiting a client. They should not be barrier to someone choosing to go.’
The news comes amid a range of regulatory pressures on wealth managers.
Earlier this month the FCA’s thematic review into adviser charging found 73% of firms were not being clear about the cost of advice. The watchdog also said it could take enforcement action against two firms based on its findings.
The FCA has also recent launched a probe into wealth managers use of in-house funds.