In this week's magazine (out on Thursday), I write about the endless efforts of our big banks to avoid having to actually compete on price. They look like they are trying to do so they keep cutting headline mortgage rates and raising headline savings rates but look at the reams of terms and conditions that come with any given product and you will see that the best buy rates are only the beginning of the deal.
Almost all savings accounts come with bonus arrangements that only last 12 months and most mortgages come with ludicrously high "arrangement" fees, all of which make attempting to compare products based on their advertised rates to be all but impossible. It's very irritating.
Even more irritating, however, is the way in which this need to impose endless extra cost is embedded throughout the industry. I moved an Isa recently and was pretty shocked by the cost of doing so. It seems I am not the only one.
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A note from comparefundplatforms.com this morning points out that some of the big players in the DIY investor market place are taking on the old tricks of the industry. How? Exit fees.
All platforms (on which you hold your shares or funds in an ordinary account, Isa or Sipp) are obliged to let you transfer your assets to another company as they are. This means you don't have to take on the costs of selling and buying back your holdings, and should, in theory, make the whole thing cheap and easy.
So, if you are with one provider but happen to note that another is a whole load cheaper (something the Retail Distribution Review is making increasingly possible), you can just move on. The problem is that the platforms don't like you moving on. They like you to stay with them. So, it is in their interest to find a way to make moving less desirable. Which is exactly what they do.
Want to close an Isa at Barclays Stockbrokers and take it elsewhere? That'll be £60 for the closing and £30 for each transfer. If you have 15 holdings in your account, the move is going to cost you a total of £510. Not so tempting any more is it? At £20 a transfer it is cheaper to leave Alliance Trust Savings (although given how cheap their service is you might not want to leave), at £10 it'seven cheaper to leave Charles Stanley but others come in more expensive TD Direct charge £35 per transfer.
The providers will say that there is admin expense involved in shifting portfolios and that they are entirely entitled to claw that back. Fair enough. But given that the charges for this admin range from £0 a holding (Cavendish Online) to £35, you might also think that some providers are both taking a final bite at each investors cherry and, as the note says, also "doing their best to discourage exits to more competitive providers."
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