Lloyds Banking Group customers could face a 12-year wait to see a reduction in fund fees on Scottish Widows and Halifax products despite value for money assessments deeming charges to be too high.
Around 80 funds were examined across the Scottish Widows and Halifax value assessments with an average cost of 1.24%, according to British newspaper The Times. That will now be brought down to 0.84% but only on the 20th anniversary of the customer holding the fund.
The 40 basis point fee cut, on products sold between 2001 and 2012 before the retail distribution review came into effect, would be one of the largest fee cuts that have come out of the value for money assessments.
In August, The Times analysed value assessments from 12 fund groups, including M&G, Invesco, Vanguard and St James’s Place, and found fee cuts had ranged from 0.11% to 0.50% saving the average investor £100 ($128, €109) annually. In total, £30m had been saved for over 320,000 investors.
The wait begins
The fee changes within Lloyds Banking Group would affect significantly more customers.
Of Halifax Investment Fund Managers’ 342,000 customers, 94% will get a fee cut. Scottish Widows Unit Trust Managers has 323,000 customers with 97% set to see fee cuts.
Because of the commission arrangements on the Halifax products, fees will only start to be reduced 20 years onwards from when the customer first bought the product. That means people who bought the funds in 2012 would be waiting until 2032 before they started to see a reduction in fees.
For Scottish Widows customers, the 0.4% reduction in fees will begin without delay. A spokesperson said this was because they paid a portion of the advice fees upfront while Halifax customers did not.
The Times said for Halifax customers the fee cut would happen on a rolling basis with customers initially getting 0.4 percentage points of their fee annually from the 20th anniversary of their holding. Scottish Widows did not confirm the timeframe for its fee reductions.
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