As the stockbroker/fund platform price war rages on, Halifax has announced its new pricing structure, revealing it will be increasing its share dealing costs.
From 31 March 2014 Halifax will be increasing its share dealing cost from £11.95 to £12.50 per trade. This will be a flat rate, regardless of the size of the trade or a client's assets. That per trade cost is more expensive than competitors such as Interactive Investor, which charges £10 per trade with a reduction to £5 for frequent traders.
Halifax, like Interactive Investor, charges no annual platform fee. It will retain its flat administration charge of £12.50 plus VAT per year for Isa accounts and free non-wrapped share-dealing account, whereas II levies a blanket quarterly 'trading credit' of £20, which includes the cost of the first two trades.
However, Halifax will join Hargeaves Lansdown as one of the many brokers to penalise clients who prefer not to deal online. Hargreaves has a £24 'paper fee', while Halifax will charge £25 for telephone trading.
Damian Stansfield, managing director of Halifax Share Dealing, says he believes a flat fee is the fairest way to charge clients and "help them to make the best investment decisions".
"Regulatory changes mean brokers will have to levy a fee to cover the cost of their fund dealing service, but it was important to us that these costs were transparent and as easy to understand as possible," he adds.
Stansfield says Halifax is "acting in the spirit of the new regulation and in the best interest of customers", adding that the broker will be automatically converting client's holdings into "clean" funds, which do not include extra fees such as annual trail commission.
Cat amongst the pigeons
Justin Modray, founder of comparefundplatforms.com, says: "Halifax Sharedealing has really set the cat amongst the pigeons by undercutting almost all the other platforms with its new pricing from 31 March. It will offer a small potential annual saving over other fixed price platforms such as Interactive Investor depending on how often a customer trades. But perhaps the bigger news is that Halifax stands to massively undercut percentage fee rivals such as Hargreaves Lansdown, Fidelity and Barclays Stockbrokers on larger sums.
"Halifax will also automatically convert existing customers if they will be better off under the new clean pricing regime, unlike Fidelity and Hargreaves Lansdown.
"The downsides are that the service looks pretty basic, with little in the way of fund research tools, and fund choice is narrower than some."
Hargreaves Lansdown was the first to unveil its new pricing structure in 2014, which will come into effect in March, but has been undercut by rivals such as Fidelity and Barclays Stockbrokers.
Halifax will charge £25 for each stock transfer out, up to a cap of £125, although transfers to other providers are free of charge until 5 April 2014. However Hargreaves and AJ Bell will be charging their clients exit fees to move their holdings to a new provider before their new pricing comes into effect.
This article was written for our sister website Money Observer