UK share dealing and ISA custody fee

[JamesIG]

Hi all - earlier today we sent an email to our share dealing clients to let them know that we are replacing our inactivity fee with a new share dealing and ISA custody fee of £24 a quarter. Although we are introducing this fee we will continue to offer very competitive share dealing costs, a great front end trading experience and safe custody of any assets you hold with us. 

IG Community is here to transparently discuss both market movements, and IG products and offerings in an open environment. Please feel free to ask any questions you may have here. The email was as follows.

 

Share dealing and ISA custody fee email

Date: 16.01.18

 

We’re writing to inform you that we’re replacing our share dealing inactivity fee with a quarterly £24 custody fee.

You could be subject to the fee if you hold shares or ETFs in a share dealing account or ISA at the end of each quarter. However, it is dependent on your trading activity – so you will be exempt from the charge if you:

• Deal three or more times across any of your IG accounts during the quarter
  AND/OR
• Hold assets worth £15,000 or more across your IG Smart Portfolio accounts at the end of the quarter
  AND/OR
• Hold no open positions in your share dealing account or ISA at the end of the quarter

Any commission you pay on your share dealing, ISA or SIPP accounts during the quarter will also be deducted from the fee. For example, if you placed a single trade in your ISA during the quarter at £8 commission, you would pay a custody fee of £16.

But don't forget that you only need to place three trades of any value across any of your IG accounts during the quarter, in order to be exempt entirely from the fee.

 

When will the fee come into effect?

Your accounts will be subject to the custody fee from 1 April 2018, which marks the start date of the first quarter’s activity. If you have not met our exception criteria during the quarter – and you have open positions on your share dealing account or ISA on 30 June 2018 – you will be charged in July.

Please note that the custody fee will be applied per client rather than per account, and accounts with assets will be allowed to go into deficit as a result of the charge.

 

Why are we implementing a custody fee?

Our share dealing service provides active traders with an on-exchange dealing platform, where they can buy and sell UK and international shares at low commission rates and with low currency conversion fees. Offering these assets – and providing safe custody of them – comes at a cost, which we believe should be fairly met by clients who use these services.

However, to show gratitude to our active traders and investors, we're happy to reduce or waive the fee for those who meet the trading conditions listed above. For more information about the custody fee, please visit our website. Or to see our fees and charges in full, click here.

 

[end of email] 

 

Share dealing and ISA custody fee quick FAQ's

 

When? The quarter start date is April 1st so the earliest existing accounts could be charged is July 2018 based on their holdings as of 30th June.

How? We want to avoid taking funds from an ISA to cover custody fees where possible. As a result we will first attempt to take funds from the share dealing account, if there is no cash balance then it will go to the ISA. If there is no residual cash in either account then we'll charge the account with the greatest asset value. 

Is this per client or per account? Per client.

Can I reduce these fees? You only need to place three trades of any value across any of your IG accounts during the quarter, in order to be exempt entirely from the fee.

I don't have any open position in my ISA or share account. Will I be billed? If you hold no open positions on your share or ISA account you won't be billed.

Are transfers out still free? Yes.

Do transfers (in or out) count as trade? No.

I don't have an account open via the UK office, so will I be charged? Only those subject the UK site terms and conditions and Product Details. Australian, German, Dutch and French site clients will see no change, although a similar fee might be considered in the future

[ycans]

This new quarterly inactive fee is annoying and I’ll be moving away from IG come April. I don’t want to be pressured into trading every quarter, which doesn’t even take into consideration if I made a high number of trades in the previous quarter.

[StockTrader]

I totally agree with you. This fee is insulting and the explanation about WHY they introduce it represents an insult to our intelligence.

IG makes tons of money from fees and interests and now it is becoming greedy and greedier...

I'm disappointed.

[JamesIG]

---

ycans wrote:

This new quarterly inactive fee is annoying and I’ll be moving away from IG come April. I don’t want to be pressured into trading every quarter, which doesn’t even take into consideration if I made a high number of trades in the previous quarter.

---

StockTrader wrote:

I totally agree with you. This fee is insulting and the explanation about WHY they introduce it represents an insult to our intelligence. IG makes tons of money from fees and interests and now it is becoming greedy and greedier... I'm disappointed.

Hi  and - thanks for your message and feedback regarding our UK share dealing and ISA custody fee. I do understand the negative sentiment regarding this new administrative fee if you are a long term passive investor, however I hope the three months notice if you are looking at withdrawing stock allows you to find an alternative broker.

 

I just wanted to reiterate something from the email. There are a few ways to avoid this administrative charge (deal three or more times across any of your IG accounts, hold assets worth £15,000 or more across your IG Smart Portfolio accounts, or hold no open positions in your share dealing account or ISA at the end of the quarter) and I just wanted to reiterate that we don't want to pressure anyone to trade if they do not want to. It is not our aim to monetize our existing client base.

 

The main goal here, and hence why we have done it before Aprils ISA season, is to show that IG is the place for active investors. We still represent significant value for those who trade via our share dealing offering as you can see here, and therefore IG still remains good value if you trade at least once per month (across any IG account type). 

[BigNoo]

Hi 

 

Can you clear up something from the rules re this new custody fees?

 

You say "three or more times across any of your IG accounts, hold assets worth £15,000"   is this an AND or a OR situation ie are you saying you have to do three trades and have over £15k or will having over £15k be enough ?

 

Thanks

[JamesIG]

Thanks for the question  , let me clarify. These will be AND/OR rather than just AND. This means that if you do any one of the following then you won't be charged. Let me know if you have any more questions.

 

• Trade three or more times across any of your IG accounts

OR

• Hold assets worth £15,000 via a smart portfolio.

OR

• Don't hold an open position over the quarterly period.

 

 

[BigNoo]

Hi

 

I am holding over £15k in a Share Dealing Account so am I right to assume I will get charged the fee ?

 

 

[Chris900]

Hi,

 

So basically I get charged the new £24 fee every quarter or I make 3 trades at £8 each (totalling £24). There really isn’t a way around effectively losing £96 per annum now wait for badly performing stock to bounce back is there?

[JamesIG]

---

BigNoo wrote:

I am holding over £15k in a Share Dealing Account so am I right to assume I will get charged the fee ? 

---

£15,000 worth of cash on a share dealing account, not held in a Smart Portfolio, wouldn't meet one of the three requirements, so in this example you would be charged the fee. 

[JamesIG]

---

Chris900 wrote:

 

 

 

So basically I get charged the new £24 fee every quarter or I make 3 trades at £8 each (totaling £24). There really isn’t a way around effectively losing £96 per annum now wait for badly performing stock to bounce back is there?

---

Hi  - If you are an active trader on the IG share dealing platform then this is correct. You can also hold £15,000 in a Smart Portfolio, or trade a minimum of three times across any of our other account types such as spread betting or CFD trading. 

 

You can see how we compare against our competitors here, or via the extract below. 

 

Provider	IG	Hargreaves Lansdown	Barclays	Halifax	HSBC	Selftrade	Interactive investor
Standard commission rate (UK shares)	£8	£11.95	£6	£12.50	£10.50	£11.75	£10
Best commission rate (UK shares)	£5	£5.95	£6	n/a	£7.95	£6	£6
How to qualify for the best rate	Place 10 trades, or one leveraged trade, per month	Place 20 trades per month	n/a	n/a	Place 9 trades per quarter (Plus account only)	Place 20 trades per month	Place an average of 10 trades per month for three consecutive months
ISA admin fee	£0 to £24 /quarter	0.45% up to £45pa	0.1% up to £125pm	£12.50pa	£42pa	No	£22.50 per quarter - gives you £22.50 of trading credits
Standard commission rate on US shares	2 cents per share, minimum of $15	£11.95	n/a	£12.50	$29.95 (Plus account only)	£12.50 + 0.5% of trade value	£10
FX conversion fee	0.30%	1.50%	n/a	1.25%	0.00%	0.50%	1.50%
Total cost to you on a US share trade of $50001	£22.31	£64.67	n/a	£55.78	£22.27	£53.20	£63.22
Commission on trades placed by phone	£40	1% (min £20, max £50)	£25	£25	£29.95	£17.50	Online share dealing rate + £40

[invest-h-home]

Hi James IG, can IG management consider a fairer charging system by using a credit system, meaning a maximum total credit of £96 (£24 x 4). This way for those who trade more in anyone quarter but not trading in some other quarters can still claim the credit and reduce the fees. This IG system is putting pressure on investors to trade when they are not ready and this has to be bad practice.

Also Now IG starts to charge this quarterly fee can IG put in a proper 'stop loss' for share dealings investors. Please do not suggest we can use alerts and other methods as they are not the same. I have Australian stocks; due to the time difference the alert can come say 3:00 am UK time when I am sleeping. 'stop loss' is a basic but essential tool for share dealings and a good 'stop loss' should allow the investor to choose how long it can remain active for UK and all international stocks.

[Goldry]

I will look at how this might affect me in the first couple of quarters of operation. If I incur charges that I can avoid I'll move to iWeb or similar.

 

What would make this much more acceptable would be to allow a credit to build up so that trading fees from other than the charging quarter could be used to offset the custody fee. I think this is how iii work their fees.

 

Even if the credit limit were the equivalent of 2 quarters charges (£46) that would be better.

 

Someone else posted the same earlier and I do think this would reduce concerns with the fee introduction.

[Chris900]

Hi, 

 

Do you have any info regarding how I'd transfer my shares elsewhere, if there are any fee's from IG etc please? I'm pretty sure Halifax accept shares from elsewhere FOC and I can just let them sit there for as long as I want with them without charges (I think)

 

Thanks

Chris 

[Goldry]

Hi Chris

 

You’ll have to DYOR on whether iWeb or one of the other platforms is the best place for your investments. I’m certainly no expert. As I do understand it though iWeb do not charge an ongoing fee, just a set up (£25) and then trading fees. If you are not trading then that would be cheaper than IG.

 

IG don’t charge for transferring out and iWeb don’t charge for transferring in. I think that iWeb handle all the transfers once you have set up an account with them.

 

if you do go down this route might be good to share your experience with the IG community before you depart

[frostie]

So is it possible to avoid the fee by placing 3 spread bets in the quarter? then no fee will be charged across share dealing account?

 

Also is there an indicator on the platform to tell a user that they will incur the 24£ penalty charge or a method that the platform says the user will be exempt for the quarter because x conditions have been met?

 

[frostie]

has anyone used get stocks as an alternative?

[Chris900]

Hi, 

 

Thanks for the help Goldry. I'm definitely going to try sort something out. I know Halifax don't charge you to transfer in so if IG don't charge you to transfer out that could be the solution

 

I'll post on here with what I've sorted when it's done

 

Chris 

[Goldry]

Frostie

 

I had a trial account for a while last year. Whilst it looked quite good I found the tools very limited and also couldn't trade in some (AIM) companies. For me too many limitations for anything serious, but it might have improved in the last 9 months.

[invest-h-home]

Hi James IG, in your chart you did not put in yearly management fee from each broker, e.g. Hargreaves Lansdown's fund and share account does not charge any quarterly or annually management fee; which is ideal for keeping shares for long term. I think IG should consider that for ISA and share dealing accounts if they hold £15,000 or more there should be no fee. I won't be surprised that many IG clients are looking for another broker.

[JamesIG]

Hi all - thanks for your replies and questions on this one. Let me try and go through some of these replies.

 

---

invest-h-home wrote:

Hi James IG, can IG management consider a fairer charging system by using a credit system, meaning a maximum total credit of £96 (£24 x 4). 

 

Also Now IG starts to charge this quarterly fee can IG put in a proper 'stop loss' for share dealings investors. 

---

Hi  - In regards to your feedback points these are definitely things I can feedback. It's worth noting that although a stop level isn't shown on a deal ticket for share dealing, you can create one manually. For example say you have 10,000 shares in Lloyds when it was 70p but you wanted a stop at 50p. All you would do is bring up a new deal ticket and set a 'stop order GTC' to sell that particular share at a level of 50p. This GTC order will remain on exchange for a period of 90 days and will trigger if the market moves through this level. 

 

 

 

TrendFollower wrote:

My take on all this is very simple. Use IG's Spread Betting platform which is not included for the quarterly fee.

 

You can still trade shares and have positions via spread betting which is free from Income and Capital Gains tax. 

 

Only Share and ISA accounts will have the fee. It does not apply to Spread Betting and CFD accounts.

 - this is certainly one option. Another option is to place three spread bets on your linked spread betting or CFD account to mitigate the charge. 

 

 

 

Goldry wrote:

I will look at how this might affect me in the first couple of quarters of operation. If I incur charges that I can avoid I'll move to iWeb or similar.

 

What would make this much more acceptable would be to allow a credit to build up so that trading fees from other than the charging quarter could be used to offset the custody fee. I think this is how iii work their fees.

 - I will pass this feedback onto our decision making team.

 

I also appreciate that other providers such as iWeb will have different offerings, costing, and supporting packages which in some cases maybe more what you are after. If IG isn't for you then that is of course fine but it's also important to look at a providers offering as a whole. For example things like their dealing platform and international FX charges. (For example iWeb look to have a 1.5% FX charge compared to IG's 0.3%. That would mean a single £5k round trade on American stock is going to cost £150 compared to IG's £30). 

 

Although there maybe others out there with a low base cost, I think the IG package as a whole is still very competitive, however as stated this does depend on what you are looking for. If you would just like a place to hold stock then maybe other providers would be more suitable. We would like to position ourselves as the place to come for active traders, hence the change in commission and administrative costs.  

 

 

 

Chris900 wrote:

 

Do you have any info regarding how I'd transfer my shares elsewhere, if there are any fee's from IG etc please? I'm pretty sure Halifax accept shares from elsewhere FOC and I can just let them sit there for as long as I want with them without charges (I think)

Hi  - investments can be transferred in or out free of charge. If you are looking to transfer out please get in contact with your new provider who will facilitate the transfer. 

 

 

 

frostie wrote:

So is it possible to avoid the fee by placing 3 spread bets in the quarter? then no fee will be charged across share dealing account?

 

Also is there an indicator on the platform to tell a user that they will incur the 24£ penalty charge or a method that the platform says the user will be exempt for the quarter because x conditions have been met?

Hi  - In regards to your first point, yes you can do three spread bets in a quarter and this will satisfy the requirements. In regards to your second point, let me get back to you. At present I am unsure if there will be anything in platform, however we will probably have some sort of email notification. 

 

 

 

invest-h-home wrote:

Hi James IG, in your chart you did not put in yearly management fee from each broker, e.g. Hargreaves Lansdown's fund and share account does not charge any quarterly or annually management fee; which is ideal for keeping shares for long term. I think IG should consider that for ISA and share dealing accounts if they hold £15,000 or more there should be no fee. I won't be surprised that many IG clients are looking for another broker.

 - Thanks for your thoughts on this. I shall pass on your feedback to our decision making team however I don't believe this is likely to change as this is basically the model we had before (without the 15k caveat), and doesn't address the branding point we are pushing for: that IG is a very cost efficient broker with a multitude of trading tool and the place to come for active traders. 

[JackJones]

I concur that as I only invest small amounts and can not always afford to trade that once a month, 1) my gains vs fees will offset massively bringing my potential gains down and even if I was getting decent dividend payments to offset this is a pain, essentially any trader would have to make £100 a year to break even before claiming any capital gains not only that but you charge £8 to buy and then another £8 to sell...

2) with the other companies that you have put comparisons against you have a better share dealing cost but due to this new cost you are actively punishing people for holding off trades for a better time to buy e.g the market are crashing and trades want to wait for a bounce back now they will get charged for trying to invest intelligently!

 

My personal opinion is that you have just completely spoilt you company as one of the best trading companies, an inactivity fee was already in place so idle traders were still charged but now even patient traders are charged unnecessarily...

[JackJones]

P.S On top of that you have a minimum pay in of £200 and a minimum trade amount of £100!

[ycans]

This is how I see it, it’s essentially a £100/yr membership fee for using their platform if you’re a long term investor. I normally place all of my trades at the start of the financial year, so I’ll be charged for the remaining quarters (despite my >12 trades at the start of the year)... But then if I place 3 small spread bets each quarter, this fee is now waived? This new fee structure is both confusing and comes across as disengenous (despite the fairly modest cost). There are many other online trading platforms with competitive prices that have little to no reasonable inactivity fees that I’ll be considering.

[JackJones]

I trade fairly frequently where possible even if it is just to top up on my stocks in my portfolio as I have just started building one but when I need to let it stand, like you I will now start to get charged where as I believed I was paying my fair share in fees anyway...

 

I am genuinely disappointed by this as I honestly felt that this was one of the best companies to trade with from my experience so far but forcing people to trade where as you said they could just make a membership fee which then gives people a choice as to whether they want to pay it or not trade is up to them!

[mattt]

I am long on a US stock and through the FX commission of my quarterly dividend payments, IG make over £30 a time, so over £120 a year. I feel the additional custody fee is excessive in a situation such as mine. Can't the custody fee in this situation we waved or count as credit towards the commission charged? Surely I am being an active investor with your commission gained from my FX conversions? My shares aren't sitting there just doing nothing!

 

[DG]

I totally agree here. I've traded 24 times during the past 19months,but some quarters I have not traded 3 times. Its a shame IG have brought this charge in. Being small investors it hits us really hard. Now of course we have no option but to uproot and look elsewhere

[JackJones]

Well DG I have contacted Hargreaves Lansdown and the how a higher commission fee but they have no holding or management fees and they also have a DRIP program for dividend re-investment with no charge also!

 

I have checked out their trading platform and the information that they provide on companies is top of the line!

 

I personally am in the process of filling in forms to change to them, again it is a shame that IG have implemented such a stupid fee as I would have been content sticking with them...

[JackJones]

Hi trendfollower

 

I appreciate the feedback thank you very much, if you don’t mind me asking why did you stop using them?

 

Is there anything to watch out for with them?

 

Again thanks.

[JackJones]

Ah right that makes more sense, I thought you had stopped using them. mis-read what you put!

 

Do you have any issues with Hargreaves Lansdown?

 

I have just filled in all the transfer form and sending it off today, I do like the fact that they offer dividend re-investment options as well!

[JackJones]

Well I definitely feel I have made the right choice now, thank you very much for that!

 

I do like their resources that they have, do you know if they have any educational tools available as obviously being a novice investor I would like to further my knowledge basis so that I can improve as a trader?

[JackJones]

I have done my fair old research and have been trading for the past year and a half just building up a portfolio gradually but more information never hurt anyone, I am a long term trader looking for passive income from dividends, I research the company first before I buy into it but there are always more regulations to learn such as the tax relief form you were talking about earlier!

 

I have a reasonable understanding of what I am doing, I would just like to get better at it. For example I have holding in card factory at the minute which recently saw a drop of about 30% however the companies book look good and I personally belief this is down to market psychology as a result of the brexit fear mongering, however time will teach me if I am wrong I am sure and my risk tolerance is high I am happy to watch this holding drop so I can learn how it will recover if it does...

 

Small amount paid for an education in life...