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UK share dealing and ISA custody fee

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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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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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No not so far. I must admit I like their platform and online visual portfolio screens. 

 

They even helped me chase up a company's EIS Tax Relief form when I had invested in a company which was eligible. 

 

Their range of investment funds (Unit Trust + OEICS) and investment trusts are quite good.

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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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I am sure they do. However, I am very sceptical of how useful educational tools are for novice investors on broker platforms. My advice would be to further your knowledge first before becoming a trader but do so by reading books and knowing what is happening around the world with a bit of economics mixed in. Feel free to see of my previous posts which may guide you if you find them of interest.

 

If you want to improve as a trader then you need to work out what kind of trader you want to be? A trend follower? Momentum trader? Swing trader? Do you have a trading plan? What is your trading strategy? Do you have strong risk management in place? Which assets are you going to trade and why? What are you aims and objectives and what is your plan for meeting them? Will you be trading both long and short so that you can make profits regardless of whether markets are trending up or down?

 

I could go on and on. The best advice I can give you is to watch the price behaviour of what ever you are trying to trade. Understand it. Look at the fundamentals and the 'story' behind the price behaviour. Look at it from a technical perspective and observe the charts. What are they showing you? Do you know why the price is moving in its current direction? Spend time, have dedication, be enthusiastic and have passion for making money. You will need to put the hours in and no one can give you a magic formula for being a successful trader. You will have to look at your risk tolerance and personality and decide which strategy is going to be best for you and whether you will be able to execute the strategy to meet your aims and objectives.

 

Lots of effort, dedication, time and capital will be required!

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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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Jack,

 

You state you are a long term trader. What strategy have you adopted? You mention you are looking for passive income from dividends. Are you sure you are not an income investor or dividend investor? I apologise but I do not understand your first paragraph. In terms of tax relief then that is more in relation to myself investing in start up growth businesses which allow investors to claim either 30% EIS or 50% SEIS tax relief off their income tax liability. 

 

What do you deem as reasonable understanding? Your execution on Card Factory is not something that I am familiar with and to be honest I don't understand. I am a trend follower and I let the price action help me to decide when to enter or exit a trade / investment. I will always have stop losses / trailing stops in place. I get the impression that you do not have a stop loss. What sort of risk management are you operating? My advice would be to read how successful dividend income investors produced high yielding income portfolios. Then see if you can adopt the best bits in your unique and personal style.

 

I wish you all the very best. 

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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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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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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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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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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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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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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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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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