I previously commented, both on this blog and in the ShareSoc Informer Newsletter, on the revised charges that Youinvest announced on the 9th August. The impact on SIPP investors with largish portfolios of direct investments (shares or investment trusts) seemed to be minimal. But the increase in custody charges on funds caused more than one ShareSoc member to complain.
The introduction of a custody charge on holding shares, investment trusts, ETFs, gilts and bonds in SIPPs, ISAs and Direct Dealing accounts may affect some but the charge is capped and in the case of SIPPs there are offsetting reductions in other charges.
The custody charges on funds could now be quite substantial though – for example £1,375 per annum on a portfolio of £1 million consisting only of funds. Any fund portfolio greater than £80k would incur higher custody charges under the new charging structure compared to the current one. But the dealing charge for buying/selling funds will be reduced from £4.95 to £1.50.
The only way to check whether you will be impacted by the new charges is to work out the impact based on your own portfolio size, its constituents and how much you trade. Then you can compare it with other providers although Youinvest claim to be still competitive as against the other major stockbrokers but it’s certainly worth checking to see if you can get a better deal elsewhere because minimising costs is one of the key factors in achieving good investment performance.
It is undoubtedly true though that stockbrokers are coming under financial pressure as trading volumes have been falling, interest on cash held on behalf of clients has almost disappeared, and regulatory costs have been rising (often driven by EU directives incidentally). Youinvest are simply the latest broker to reconsider their charging structures in response to market pressures.
What particularly annoyed some was the fact that if you decide you can do better with another platform provider then the cost of making a transfer can be high. For example £25 for an “in-specie” transfer per holding plus an additional £75 for a SIPP. This probably reflects the amount of staff effort involved in making such transfers which we have commented on before. But the transfer costs might soon be recouped if the portfolio is large. In addition charges to transfer can be minimised by first liquidating into cash, which can actually also avoid a lot of delays and hassle involved in “in-specie” transfers (from my past experience of doing a transfer when Hargreaves Lansdown hiked their charges and from feedback from other members). But one would need to avoid any “initial charges” on funds that might arise by doing so, and any large bid/offer spreads on shares/trusts.
Youinvest are refusing to waive such transfer charges, but it might be worth complaining in writing to YouInvest. If there is no positive response, to then complain to the Financial Conduct Authority as the YouInvest regulator and/or to the Financial Ombudsman (they do cover ISAs and SIPPs although I think direct share dealing accounts might be outside their remit). It seems unreasonable to impose abrupt increases in charges that will affect some customers, without giving them the option to transfer without charge to another provider.