Pensions - Articles - Punitive exit fees need to go, but fees can also protect

 Following its statement that it would welcome a discussion on drawdown charge caps if they became necessary, Portal Financial believes that exit fees up to 20% are punitive and excessive, so a cap will help to protect consumers.

 But charges can also encourage consumers to think twice about transferring to strip their funds, or prompt them to seek advice.

 Jamie Smith-Thompson, managing director of Portal Financial, says: “Clearly exit fees are now an issue, especially with it becoming apparent that some providers are not allowing access to the pension freedoms. We certainly welcome a cap on the punitive charges, such as those approaching 20%, but I am also concerned that this could turn into a witch-hunt on fees in their entirety.

 “It is not a requirement for all consumers to seek financial advice before emptying their fund or transferring away, which means many people will be able to make that decision by themselves without necessarily knowing about certain implications, such as tax or how it may affect their benefits. A sensible charge can encourage people to think twice and be really sure they are doing the right thing, and hopefully even prompt them to seek advice so they don’t have any surprises.”