Investors hit with exit fees

Investors hit with exit fees


Investors could find themselves an average of £4000 out of pocket, as insurance companies introduce exit charges to those with endowments, pensions and with-profits bonds. 

Customers who have invested with Norwich Union, Friends Provident and Scottish Widows, hoping to tap into savings or draw out cash early, will incur penalties. A response to turbulent markets and reflection of the times, as the long reach of the recession begins to stretch further than just the pockets of city bankers.


It is predicted that currently at least two million customers will be affected by the exit fee, although if other insurance companies follow suit then it could affect up to eight million investors.


The Liberal Democrat Treasury spokesman, Vince Cable, has said of the fee: “The stock market crash is no longer a matter just for newspaper headlines and City investors.


“It is starting to hit home with millions of small, individual investors, many of whom were the most prudent savers.”


The companies involved have defended their decision to introduce the penalty, by suggesting that it is necessary to protect other policyholders. Others may suggest, however, that in the wake of the recent credit crisis and subsequent failure of many financial institutions, the fee is merely an attempt to divert anxious investors from taking their precious savings away, at a time when every penny counts.


By Danielle Williams

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