PEP survey: Cut-price offers

In the past, investors who did not want advice on choosing a PEP were frustrated by the fact that managers were uninterested in offering a discount for direct sales.

One way of circumventing this is to use discount brokers which specialise in offering cut-price, no-advice PEPs that undercut the PEP managers. They can do cheaper deals by discounting some or all of the commission paid to them by PEP managers for introducing business. In return, the broker receives an annual commission from the PEP manager plus a fee, typically around pounds 20 to pounds 25, from the investor.

So what's the catch? Investors should ensure these offers does not distract them from the central purpose of taking out a PEP, namely long-term, tax- free capital growth.

Leading discount brokers include: Hargreaves Lansdown 0800 850663; Chelsea Financial Services 0171-351 6022; Garrison Investment Analysis 01482 861455; Elson Associates 0500 691790; Unitas 01724 849481; The PEP Shop 0115 9825105; PEP-Direct 0800 413186; Financial Discounts Direct 01420 549090; Premier Fund Managers 01483 306090.

-Richard Shackleton