Vasilieff said that if the regulator is genuinely seeking to create a competitive market, it should act to stop both formal and informal barriers to investors moving their money.
The call comes in the wake of FCA issuing a series of consultation papers and research focused on the lack of competition in the asset management market, including a planned consultation paper on the platform market.
But Vasilieff believes that the regulator is addressing the wrong area certainly in the IFA-influenced section of the market.
He said: “Exit fees are a block to portability. The FCA has taken some action, but I think they should go further and ban them altogether. It is client money and clients should be able to do what they like with it.
“I actually think they could do it without a consultation paper. They need to say ‘It is client money. Exit charges are banned’.”
Vasilieff said that the practice is arguably more widespread in the direct to consumer market, but added that different share classes can also prove a block to movement, depending on the platform involved.
He also suggested that there should not be an administration charge to pay for an exit from a platform.
“What are you getting your platform fee for? Administration? Why should there be a special fee? That is what some people say – that it costs them to move money. But I ask them why did you take all these ongoing charges for all this time?
“Exit charges are definitely a barrier to moving. I personally don’t think that investors think about it until they come to move and then they will say ‘Oh gosh, there is a charge’ and then often they won’t move.
“It is a fact that investors, consumers are very confused by our industry. That is why I said ‘ban cash rebates’. I think we should drive towards transparency and understanding. When people invest they don’t think they are going to move away. When they come to do it, they get a charge. I think it should just be banned.
“The FCA has already made some changes. Just go the whole way and ban them. I can’t see any reason why they can’t just do that. I don’t think they should tinker with charges. In the IFA market advisers are always trying to get charges down. The free market is working for charges.”
