Mis-sold Investment Specialists - Call For a Free Expert Claims Assessment
0808 163 1659

Back to blog overview

Guide To Hidden Charges in Investment Products

Published on:

Most people are aware of the potential pitfalls when investing money, and these days, they’re especially aware of the risk of investment mis-selling. Poor advice, lack of risk assessment and reluctance to offer a full range of products are common issues, and all are grounds to make a claim.

There’s one more issue that affects investors across the UK – hidden charges. Bank advisers can make it difficult to know exactly what charges you’ll be paying on your product, which can mean the investment as a whole isn’t as attractive as initially thought.

To help you avoid being caught out, we’ve put together a list of the more common hidden charges you might not be made aware of straight away.

Common Hidden Charges in Investment Products

  1. Platform charges. If you choose to invest funds through an investment platform (sometimes called a ‘fund supermarket’) then you’re likely to be charged. Investment platforms don’t provide you with advice on which product you should invest in, but enable you to purchase different investments from the same company. But be warned: you will be charged. Costs vary depending on the platform you use, but are generally around 0.25% per annum.
  2. VAT. It’s easy to forget VAT when choosing an investment product, and the quote your investment manager provides you with for their annual management services may not include it. Remember to ask – and if VAT isn’t included, add on 20%.
  3. Set-up fees. Many investment products will incur some sort of initial fee to cover costs of setting up. Again, costs vary depending on the product and company you invest with. In the past, set-up fees have been as high as £950 upfront (HSBC) or 3% of the total investment (Nationwide Building Society).
  4. Exit charges. When committing to buy a product, make sure you ask how much it will cost should you decide to cancel your investment. Some financial institutions charge a surprisingly high amount if you want to switch to another company.
  5. Advice charges. Some banks will charge you for their advice should you choose to invest in a new plan. Others include advice as part of their ongoing fees. Make sure you find out whether advice is included when you speak to an investment adviser.

Do Hidden Charges Constitute Investment Mis-Selling?

Since the Financial Conduct Authority clearly states that any financial contract is regarded as unfair if it binds you to hidden terms, your adviser has a responsibility to ensure that you understand all costs involved.

Gina Miller, a wealth manager at SCM Private, recently led a campaign encouraging financial organisations to be more open about the real costs of investment.

“Confusion about charges on investment funds and pensions has left most investors in the dark about how much they are paying,” she stated. “This has suited the UK industry, which has benefited from charges that are among the highest in the world, but a decade of low returns has started to focus people’s attention on fees.”

If you’ve bought an investment product but weren’t made fully aware of the costs involved, then you have potential cause to make a complaint.

1] https://www.moneyadviceservice.org.uk/en/articles/understanding-investment-fees

2] http://www.telegraph.co.uk/finance/personalfinance/investing/9793587/Banks-New-fees-revealed-for-cost-of-investment-advice.html

3] http://www.ft.com/cms/s/0/a96951e8-e25a-11e2-87ec-00144feabdc0.html#axzz3ub4wG95o

Request a call back

If you'd like us to call, please fill in your details

Why choose us?

  • Hassle-free process.
  • No lengthy paperwork to complete.
  • No upfront fees. *
  • Your own dedicated claims expert.
  • Claims settled within 6 weeks on average. **
  • Over £80 million reclaimed for clients. ***
More About Us

Speak to our friendly experts

If you feel you've been let down by your bank or financial adviser please call us.

Call today 0808 163 1659

Customer Stories

We've helped thousands of people win compensation as a result of unsuitable financial advice.

William Thornley I’m absolutely delighted with the service we got from Goodwin Barrett, I couldn’t believe how easy it was and i’ve nothing but praise for them
Alan Parton This was an excellent result which my wife and I never expected. My sincere thanks to you for such an excellent achievement, I cannot thank you enough
Stuart Snowden After sending a report to Santander, they agreed with our findings and awarded Mr Snowden an amount of £7,000 made up from a refund of the losses together with interest and compensation.
William Miller This was a fantastic result I never expected. My sincere thanks for such a prompt and efficient service.
Margaret Long I am so grateful to your company but especially to Steve Wise for getting me the money back
Janet Rynkiewicz We reported our findings to Halifax and within a matter of weeks had secured our client the sum of £26,700 in compensation.
Fred Hardman After we sent a detailed complaint to Halifax, Fred was delighted to receive £6,916 from the bank in a matter of weeks.
Stephen Montague Having investigated the complaint Lloyds TSB agreed that the advice was unsuitable and agreed to pay the clients £10,700.