AJ Bell cuts its dealing charges

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AJ Bell has reduced the commission it charges for share dealing and as one of the country’s largest D2C investment platforms so when it changes its fee schedule, the market usually takes note.

With that in mind, AJ Bell will be reducing share dealing charges in three key areas:

  1. Dealing charges in shares ETFs, investment trusts and bonds will be reduced from the current £9.95 per trade to just £5.00.
  2. Frequent share dealing charges for traders who dealt ten times or more in the prior month. These charges are being reduced from the current £4.95 per trade to just £3.50.
  3. Telephone dealing charges are being trimmed from £29.95 per trade to £25.00 per transaction.

Changes to deposit interest

AJ Bell is also amending the interest it pays on its client’s cash balances.

As of April 1st, there will be a new tier for customers with cash balances larger than £100,000.

Who will now receive 3.95% on balances above that amount, on top of 3.20% on cash balances up to £10,000, and 3.70% paid on amounts above £10,000. and upto £100,000.

Unless that is, those funds are held in a Junior ISA.

In which case, they will receive 1.95% on the first £10,000 and 2.45% between £10,000 and £100,000 with cash balances above £100,000 receiving interest of 2.70%.

SIPP accounts in drawdown will receive 3.45% on cash balances up to £10,000, plus 3.95% on cash above £10,000, up to £100,000, and 4.45% paid on any cash balances above £100,000.

AJ Bell said in a statement that the changes to fees and interest payments form part of its commitment to provide customers with a low-cost and easy-to-use investment platform.

The firm is also changing the name of its “custody charge” to “account charge” to better reflect what the fee is for and to fall in line with its consumer duty obligations.

Race to the bottom?

The provision of self-directed share trading and investment services is becoming an increasingly competitive marketplace and as such fees are under pressure but as we have said before and will no doubt say again there are few winners if any in a race to the bottom on fees.

Retail customers may benefit in the short term, but if the net result of continued fee reduction is to drive some providers out of business, then consumer choice is reduced.

And of course, if we ultimately end up with a market containing just a few players then those prices could easily rise once more.

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