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£7.3Bn Skimmed Off Savers By Fund Managers

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http://www.telegraph.co.uk/finance/personalfinance/savings/8583451/Savers-losing-thousands-of-pounds-in-hidden-investment-charges.html

Fidelity International has become the first big City institution to say publicly that investors should be warned about a whole range of hard-to-spot fees when putting money in stockmarket funds.

The company, which invests billions of pounds for more than 660,000 British customers, told The Daily Telegraph that the headline annual fee on one of its popular funds was only a third of the actual cost. As a result, the typical expense of an Individual Savings Account is hundreds of pounds more than most consumers realise, and thousands of pounds more for larger investments.

Fidelity is calling on the industry to publish “simple, transparent” fees that will show the “on the road” cost of different funds, rather than the far lower annual management charge, which is all that is disclosed by most companies.

“Fees reduce the value of your investments so everyone should be clear about what they are paying and what they are getting in return,” the company said in a statement.

The admission follows an investigation by The Daily Telegraph last year which found that £7.3 billion was being “skimmed off” annually by City bankers and fund managers in hidden fees.

Regulators are growing increasingly alarmed and the Financial Services Authority is considering insisting that investment products be “pre-approved” before going on sale.

Fidelity compared the current situation to “no frills airlines” which charge passengers extra for tax, airport levies and checking in baggage. Airlines now have to disclose the total cost before a customer pays.

The company disclosed that its popular UK index fund, which is its cheapest, has a management charge of 0.1 per cent – but that the actual cost to savers was 0.3 per cent. If a consumer invested £10,680 in Fidelity’s Moneybuilder UK Index Fund through an ISA, the charges over 10 years would be £630. Although an apparently small sum is levied, the compound impact over time is dramatic.

It has not published similar figures for its full range of funds. Many have far higher advertised annual fees and the impact of hidden charges will be even higher.

Gary Shaughnessy, a managing director at Fidelity, said that the whole industry received feedback warning that customers found it difficult to compare products.

Fidelity analysed various funds invested in ISAs and found that the costs could be significantly higher than the annual management charge and “total expense ratio” advertised by the companies involved. “You should be able to easily compare them,” said Mr Shaughnessy.

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What percentage of total funds managed does that 7.3 billion represent?

In any case, it's all just one big casino, and the house always wins.

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It's all perfectly legal and they deserve every penny they can get their filthy robbing mitts on.

They do work so hard after all and create so much misery wealth.

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I don't think "financial products" are sold for the client's benefit, are they? :angry: :huh:

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Some years ago I researched hidden costs and since then have held all of my investments directly.

I hold share certificates.

I hold sovereigns.

I lend directly (actually I don't but I did) via Zopa etc

I hold NS&I certs

Where is the need to pay anyone anything? The only cash I hold is a float to manage lumpy cash flow.

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Where is the need to pay anyone anything? The only cash I hold is a float to manage lumpy cash flow.

+1

SIPP

Dames

Edited by Dames

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Perhaps time for some mis-selling cases here, rather like PPI.

I think that would bankrupt a few fund managers.

What do you think has been mis-sold?

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What do you think has been mis-sold?

I would have thought that was pretty clear from the context. Funds have been sold to consumers with a claim that there is a certain fee, whereas in reality the fees are far higher.

The retail finance industry is very bad value for consumers generally. It serves best the leaches that feed of them - fund managers, financial advisers and a whole bunch of crooks that feed off business.

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  • 309 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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