Jul 112012
 

There haven’t been many recent updates to the site due to a combination of other commitments and few major changes that I’m aware of among international stock brokers. However, we have seen a couple of UK stock brokers change their fees and this is likely to become more common in the run-up to the Retail Distribution Review and the ongoing Platform Review.

In particular, we are likely to see more providers introduce explicit account maintenance charges for both fund and share accounts, since they will no longer receive trail commission rebates from funds. The advantages and disadvantages of this change can be argued – certainly the improved transparency on exactly what clients are paying seems good – but it will probably mean a net increase in costs for smaller and less active accounts, which have traditionally been subsidised by the fees received on larger and more active ones.

A few of the recent changes are:

  • Interactive Investor has introduced a £20 quarterly fee. This is on a per customer basis – so if you have a regular account and an ISA you only pay once. Trading fees are offset against this (so effectively the account fee includes two regular trades in that quarter). The £10 trading fee now also applies to fund purchases, although 100% of trail commission for funds will now be rebated to you.
  • Alliance Trust Savings will charge a £10+VAT quarterly charge on regular investment accounts and on ISAs from the start of August 2012. Previously it charged £25+VAT on ISAs and nothing on regular accounts. The one free trade per year for ISAs will be withdrawn.
  • Selftrade is changing its annual fee of £35+VAT to a quarterly inactivity fee of £8.75+VAT, waived if you trade at least once in the quarter.

Changes like these make it harder to determine what the most competitive account is at present. For example, Interactive Investor was previously one of the best around for low-turnover investors in UK stocks and funds, but that’s not necessarily the case anymore.

However, investors should be cautious about rushing to switch out of any of these to another firm, since there is a good chance that other providers may adjust fees as well in the near future. For those looking for the cheapest provider, it may be worth holding off until next year when the new rules come into effect, firms adjust their charges and the situation becomes more settled.

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