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UK share dealing and ISA custody fee


JamesIG

Question

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

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wrote:

 

Can I ask if the £24 per quarter completely replaces the inactivity fee?

 

Hi  - that's correct. This will replace the inactivity fee. 

 


wrote:

 

Also, what do you mean by being active, does it mean placing 3 orders in a quarter? For example if I have an open position that I'm willing to keep for the long term, by adding a small amount 3 times a quarter will count as being active and be eligible to avoid the fee?

The stipulation is 3 trades, so that could be opening / closing trades, but it wouldn't be enough to simply have a passive 'order to open' sat on exchange which doesn't get hit. 

 

I hope that clarifies things but if I can help further please let me know :)

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Guest 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!

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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!

 

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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

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Guest 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...

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Guest 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.

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Guest 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!

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Guest 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?

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Guest 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...

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Guest DaveSimmons

Hi

 

I will also moving my shares and money out of IG - for what I consider is basic greed on their behalf. I will be moving to Hargreaves.

 

Regards,

Dan

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Guest igsnakeuk

Hi,

 

I just started using the platform and I now notice that the fees have risen. This is not a good start, but I do understand the reason.

 

Can I ask if the £24 per quarter completely replaces the inactivity fee?

Also, what do you mean by being active, does it mean placing 3 orders in a quarter? For example if I have an open position that I'm willing to keep for the long term, by adding a small amount 3 times a quarter will count as being active and be eligible to avoid the fee?

 

Thanks for clarifying.

 

Igsnakeuk

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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.

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Guest igsnakeuk

Hi,

 

Not really I'm sorry. I would like to keep some trades open for the long term and regularly add a sum to each of them to avoid the fee (so at least 3 times every quarter on different trades).

I might be opening new trades depending on the size of the portfolio I want to build, but I want to be free to avoid closing them each quarter.

My intention is to add amounts to the open positions on a regular basis once the portfolio has been created.

 

I trust this to be possible without a fee.

 

Thanks.

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wrote:

Hi,

 

Not really I'm sorry. I would like to keep some trades open for the long term and regularly add a sum to each of them to avoid the fee (so at least 3 times every quarter on different trades).

I might be opening new trades depending on the size of the portfolio I want to build, but I want to be free to avoid closing them each quarter.

My intention is to add amounts to the open positions on a regular basis once the portfolio has been created.

 

I trust this to be possible without a fee.

 

Thanks.

So I'm a little confused about what you are asking, so let me try and clarify with an example.

 

Say you open an account with IG and buy 1000 shares of a particular company. In the next quarter if you wish to add to that position by buying say 200 shares each month (for example, which would be the 3 trades) then there would be no additional charges apart from the commissions to deal of course. You do not need to close any of these positions, but if you wanted to then that would count as one of the required trades.

 

There is no requirement to close anything, I was just stating that if you were to do this then it would count as a deal towards one of the three required per quarter. 

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Guest Chris900

Hi, 

 

Following on from earlier posts (basically I had bought shares using IG and just wanted to sit on them and wait) I have managed to transfer all funds (shares and £) to a Halifax Share Dealing account FOC and now my shares can jut sit there until I decide to sell with no custody fee's applicable - success!

 

Chris 

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The share dealing inactivity fee should be renamed/amended.     

 

Place a deal (activity) - you then have 3 months to place another 3 deals (activity) - otherwise you get charged a (inactivity) fee.

 

Yet bizarrely if you do not hold any stock in your account in any quarter (inactivity) then there is no fee.

 

If you are inactive and hold no stock there is no inactivity fee yet be active you risk having a fee being added for not being inactive.

 

This confuses many.

 

 

 

 

 

 

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Guest Russell

I agree with the comments in this thread that this change is a shame. It seems that IG wish to get rid of small, casual or part-time investors.  I wonder why this is?

The main reason I chose the IG platform in the first place was its ability to support smaller investors and now, in one quick announcement, with no consultation, they decide they want rid of me.

But the thing that grates most is the wording of the announcement.  The inclusion of the word “Smart” goes almost unnoticed, but makes a massive difference.  I thought I was protected because I have more than £15K in my IG Portfolio, but it turns out that my portfolio is not “Smart”, and this was not explained clearly (until now of course when I query the charge).

And to add insult to injury I have made 20+ trades in the last year, but because only one of them was in the last quarter I still get charged!

Please sort this out IG.

Do you want me (or us) or not?

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Guest David. A
On 1/16/2018 at 11:03 PM, ycans said:

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.

This sounds a bit of con. I assume if I sell a stock that would be classed as a deal. I deal also quite regularly and have a portfolio of  over 70K, but if i don't move in a quarter they charge me £24. Time to to move on I think. 

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On 1/17/2018 at 6:27 PM, TrendFollower said:

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.

yes, this will work for some. Moving to a spreadbet account will avoid some of these custodial fees.  However, I trade with a personal account (spreadbet) but also through a registered company, using LEI, so all accountable. It is harder for a company to trade via derivatives or spreadbet, I believe. 

The fee will probably affect me (my company account) some quarters, but some maybe not. The IG platform is by far the best ( i also use three other providers) so its a small price to pay for a good service, imo.

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Guest PenguinArmy

I’m sorry, did anyone else not get informed about this until June? I was in the process of transferring in my shares in January, ironically because I had just started charging £22 a quarter. No one mentioned this, despite me making quite a thing in my correspondence about the reason I was transferring in. I have spoken to the customer service department and they basically lied and said they had told me despite me showing evidence they hadn’t. I am transferring my shares out now and will not be paying the fee. I will go to the FCA if try and keep them. 

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If this comes to fruition then it will certainly have an impact on costs of trading and share dealing, across the board, imo. >> https://blog.revolut.com/are-you-ready-to-disrupt-the-stock-market-we-are/

I have no idea how Revolut would be able to offer such a service with £0 commissions, or indeed how sophisticated or 'good' the service will be. A lot of talk at this stage but the proof, as always, is in the pudding. And it raises a lot of questions (esp on Twitter, where the comments are largely going unanswered right now ? )

One thing I do know is they are offer a remarkably modern and refreshing alternative to regular banking and FX transactions. I use their service and it is streets ahead of any mobile banking app. And the App and card are very tightly integrated which makes for a very pleasing experience.

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20 minutes ago, rimmy2000 said:

If this comes to fruition then it will certainly have an impact on costs of trading and share dealing, across the board, imo. >> https://blog.revolut.com/are-you-ready-to-disrupt-the-stock-market-we-are/

I have no idea how Revolut would be able to offer such a service with £0 commissions, or indeed how sophisticated or 'good' the service will be. A lot of talk at this stage but the proof, as always, is in the pudding. And it raises a lot of questions (esp on Twitter, where the comments are largely going unanswered right now ? )

One thing I do know is they are offer a remarkably modern and refreshing alternative to regular banking and FX transactions. I use their service and it is streets ahead of any mobile banking app. And the App and card are very tightly integrated which makes for a very pleasing experience.

robinhood offer this in America at present. They either sell their flow to HFT or they only allow passive limit orders which receive kick backs via the maker / taker method. Interesting though none the less.

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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.

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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.

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Guest 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.

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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 hereand therefore IG still remains good value if you trade at least once per month (across any IG account type). 

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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

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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.

 

 

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Guest 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?

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