The Office for National Statistics has deemed initial charges as outdated as envelopes in its latest shake-up of the basket of items and services used to calculate UK inflation.
In a press statement issued on Monday, the ONS said initial charges were removed from the consumer price index (CPI) basket due to many unit trusts no longer applying an initial charge. Unit trust fees will remain represented in UK inflation figures via ongoing charges, it said.
Five goods and services were removed from the basket including envelopes and hi-fi systems. Electric toothbrushes, dog treats and popcorn were among the 16 items added to the CPI basket.
The investment industry said the change made sense. Hargreaves Lansdown head of personal finance Sarah Coles said ongoing charges have been at the heart of how the industry functions for the past 15 years.
Willis Owen head of personal investing Adrian Lowcock likewise said initial charges are no longer the norm.
Lowcock said: “Initial charges are a bit of a legacy of the unit trust industry and have largely faded away as technology has helped fund platforms service investors and led to them helping remove some of the excess charges that featured on funds.”
Unit trusts doing direct business may be one channel that still uses the initial charge, he said.
