It pays to haggle over PEPs


Thousands of new PEP investors are paying £180 too much for their PEPs.

By going directly to PEP providers, rather than a discount broker, or other participating intermediaries, customers pay 3 per cent extra sale commission on a £6,000 PEP.

PEP companies selling direct do not cut the commission on their products. But discount brokers such as The PEP Shop, Chelsea Financial Services, Unitas, and now Hargreaves Lansdown always do. Tied agents and independent financial advisers who sell PEPs won't automatically volunteer to cut their commission, but may negotiate.

Brokers offering discounts make their money from the 0.5 per cent per annum commission fees, and forgo the initial 3 per cent.

Haydn Green, founder of The PEP Shop, says that with the new disclosure rules, high commissions are more visible, and therefore more easy to avoid. Purchasers are urged to use their new knowledge to drive better deals in the market place.

Mr Green estimates that last year £24m was paid in commission, on purchases direct from PEP companies.