While the likes of M&G and Fidelity have slashed their PEP fees to almost nothing, banks and building societies are standing firm on their charges.
You should expect to pay at least 5.25 per cent as an initial charge and 1.25 per cent as an annual management fee. Some banks and building societies charge even more.
If you are investing regularly the charges can take a nasty bite out of your savings. The average company will take more than £2.60 from each £50 invested each month. On top of that you will pay on average £7.50 in annual fees on a £50-a-month plan.
Although few investment houses have cut their unit trust charges, most are offering deals on PEPs. Bank and building society PEPs are expensive and rely on their strong brand names.
Philip Warland, director-general of the Association of Unit Trusts and Investment Funds, said that the industry was seeing two distinct markets developing: direct, particularly through banks and building societies; and independent, through independent advisers, with different products carrying differing charges and pricing structures.
"What's happening is that the banks, building societies and life offices are taking an increasing share of the total unit trust market and are aiming at the direct sector," said Mr Warland. "The traditional unit trust market will become more and more price-sensitive, but the sales force market will not be price-sensitive at all, because they will be selling on the brand."Reuse content