A deal too good to be fair?

Clive had some savings invested in a managed investment fund. In July 2018, the fund manager decided to close the fund and cash out the fund’s investors, including Clive. The fund manager offered Clive and the other investors a deal; if they moved their savings to one of the fund manager’s other investment funds, the fund manager would waive its usual fund entry fees. Clive thought this deal was unfair and improper.

 

Dispute

Clive thought the fund manager’s offer improperly incentivised investors to stay with the fund manager, rather than moving their funds elsewhere. He thought there might be better products elsewhere, but investors were being unfairly pushed into staying with the fund manager they knew. Clive said he thought the fund manager was creating an uneven playing field for investors by artificially making their own investment funds appear more attractive than those offered by the fund manager’s competitors.

The fund manager thought it’s offer was fair and reasonable, and it did not think its behaviour was improper.

Clive brought his complaint to FSCL.

 

Review

After investigating, we found that the fund manager’s behaviour was appropriate, and was not unfair or anti-competitive.

We accepted the fund manager was making its offer to try and convince Clive not to move to a competitor. However, we found this was not improper or unfair. Fund managers are entitled to offer discounts and deals to attract new customers, and they frequently do so.

We also found that the fund manager’s offer did not create any uneven playing field for investors. Clive was given all the information about his fund manager’s offer, and he was free to research the other investment funds on the market. It was up to Clive to determine whether the deal offered by his fund manager outweighed the benefits of other fund managers’ products.

 

Resolution

Although Clive was disappointed, he accepted our view and withdrew his complaint.

 

Insight for consumers

The line between unfair conduct and an ordinary business decision can occasionally be a bit blurry. If you are unhappy with your financial service provider’s behaviour, FSCL can look to see whether their conduct has crossed any lines.

Clive had some savings invested in a managed investment fund. In July 2018, the fund manager decided to close the fund and cash out the fund’s investors, including Clive. The fund manager offered Clive and the other investors a deal; if they moved their savings to one of the fund manager’s other investment funds, the fund manager would waive its usual fund entry fees. Clive thought this deal was unfair and improper.

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