The rivalry comes as hundreds of thousands of investors prepare to pour billions of pounds into Peps in the run-up to the end of the 1996 tax year in April.
The industry, which will have attracted almost pounds 6bn of retail funds into unit trusts in 1996 and hundreds of millions more into investment trusts, close to the all-time record two years earlier, is preparing to match previous last-minute investment surges in the first months of 1997.
Execution-only brokers, who last year grabbed up to 10 per cent of the market by offering cut-price deals, more than tripling their share in the past five years, are poised to do even better this year.
Their optimism is boosted by hopes of a neutral stock market - at least - in the first half of 1997. It also expects thousands of investors to invest all of their pounds 6,000 allowance for the next tax year, ahead of a general election which Labour is expected to win.
The PEP Shop, based in Nottingham, is offering a Maximum Assured Discount (MAD) scheme, whereby it promises to match the lowest commission made by any competitor and pay a further pounds 25 to savers.
Haydn Green, founder of the PEP Shop, said: "If you look at how discounting operates, it is a case of extending the principle by degree. Once you start, you have to keep going.
"We have found that there are two types of investors, those who want some advice when making a decision and those capable of making up their own minds. We can cater for the second sort extremely cheaply."
Its scheme comes as several other execution-only PEP sellers offer similar schemes, allowing savers to play one broker against another.
PEP Direct, which operates a freephone telephone service in Wolverhampton, yesterday launched its own guarantee to undercut any rival by at least pounds 5.
Brokers hope to survive by living off the 0.5 per cent renewal fee they receive each year if their clients stick with a PEP. But Don Clark, owner of PEP Direct, said: "More and more companies are offering discounts.
"The danger is that one or two may go out of business because they have to wait at least a year before they recoup any money."Reuse content