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  • FIRST POST
    • Tom Brine
    • By Tom Brine 7th Oct 17, 12:34 PM
    • 57Posts
    • 18Thanks
    Tom Brine
    New Fidelity Charges Huge Increase - Better elsewhere?
    • #1
    • 7th Oct 17, 12:34 PM
    New Fidelity Charges Huge Increase - Better elsewhere? 7th Oct 17 at 12:34 PM
    Hi All

    Firstly to go over my set up

    I have a stocks and shares ISA through Cavendish Online. Currently I invest £125 a month into the Scottish Mortgage Investment Trust and have 273.53 shares currently in the ISA worth £1188.53 (as of today).

    I have to pay 0.5% stamp duty on each monthly purchase working out at 62p. I also have to pay 0.2% service fee to fidelity and 0.05% advisor fee to Cavendish online. Last month this charge was a grand total of 19p.

    Perfect for the beginner investor. Low charges and I am happy with the return to date on the "fund" (Investment Trust)

    However this morning I have received a letter informing me of Fidelitys wonderful new share dealing service. Wonderful I thought, I can now transfer share from my work schemes into my ISA. Then I saw the changes to their fee structure.

    Firstly the platform fees still apply, so I will still have the 0.25% combined fee. I will also still have stamp duty to pay. However I will now also have to pay an additional £1.50 per deal. So each time my monthly investment goes through they will charge me this on top of what I am currently charged.

    So last months charge of 81p will now be £2.31 a 185% increase.

    To make matters worse dividend reinvestments will now also incur the £1.50 fee. So my last dividend of £1.87 would become £0.37 reinvested.

    There is also the small matter of where they take the charges from. As scottish mortgage is my only holding if I do not have enough cash in the account (currently no cash held as all money is invested each month) they will sell my shares to pay for the charges. This is fine as that is what currently happens. Unlike currently they will only sell full shares and also will charge me the £1.50 for the transaction.

    Obviously this means that I am starting to look elsewhere for my ISA as all of those fees would take a huge chunk out of my returns on the shares.

    Is anyone else getting a raw deal on this with the changes. I understand if I held a fund only the service would stay the same only with the added option of share dealing. However as I make a regular contribution to an IT it seems I am getting truely hosed with these changes.

    Any recommendations for a cheaper or similar service to that which I currently receive would be much appreciated. Of course the other option is to stop the monthly investment and just make one large purchase for the year, only incurring one set of £1.50 transaction charges. But then there's the dividend reinvestment charges which will all but destroy my dividends for many years.

    Frustrating for sure
    Last edited by Tom Brine; 07-10-2017 at 12:37 PM.
Page 1
    • A_T
    • By A_T 7th Oct 17, 12:58 PM
    • 198 Posts
    • 94 Thanks
    A_T
    • #2
    • 7th Oct 17, 12:58 PM
    • #2
    • 7th Oct 17, 12:58 PM
    Dealing in shares is never much cheaper than £1.50 per trade through a regular monthly investment.

    I believe Halifax Sharedealing costs £2 per regular trade and an annual ISA fee of £12.50.

    Also I understand Selftrade charge £1.50 per monthly trade. The only other charge is an inactivity fee of £10 per quarter if there is no trades.
    • ColdIron
    • By ColdIron 7th Oct 17, 1:35 PM
    • 3,453 Posts
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    ColdIron
    • #3
    • 7th Oct 17, 1:35 PM
    • #3
    • 7th Oct 17, 1:35 PM
    I'm surprised anyone allowed you to purchase shares without any transaction cost, you've had a very good deal to date. £1.50 is about as cheap as it gets and far from a 'raw deal' or being 'truly hosed'. The simple fact is that investing tiny sums in shares is rarely economic and most people would be better served by funds at these levels. The obvious solution to your problem as you have guessed is to purchase them less frequently. There are a few providers that do not charge an annual fee to hold shares so you could shave off a few pennies by moving to one of them. Given SMT shares trade at about £4.35 it's hard to see a solution to your £1.87 dividend reinvestment problem even without the extra charge, perhaps put them towards the fees to avoid selling down and maybe just chuck a fiver in from time to time?
    • A_T
    • By A_T 7th Oct 17, 1:58 PM
    • 198 Posts
    • 94 Thanks
    A_T
    • #4
    • 7th Oct 17, 1:58 PM
    • #4
    • 7th Oct 17, 1:58 PM
    OP in addition to what you mention you were also paying a 0.1% fee each time you dealt in an IT.
    • cloud_dog
    • By cloud_dog 7th Oct 17, 2:13 PM
    • 3,179 Posts
    • 1,710 Thanks
    cloud_dog
    • #5
    • 7th Oct 17, 2:13 PM
    • #5
    • 7th Oct 17, 2:13 PM
    Question...do you need to be buying within an ISA?

    I know all the benefits of doing so but, do you need to at this point in time? You have a personal CGT allowance for this tax year of £11300 (I believe). So this amount is on top of what you contributed to purchase the investment.

    At £125pm / £1500py, even with the continued stonking performance for SMT that is going to take you a few years to build up.

    You could always invest direct with Ballie Gifford,and then sell move in to an ISA or bed & ISA them when you near the CGT limits etc etc.
    Personal Responsibility - Sad but True

    Sometimes.... I am like a dog with a bone
    • Tom Brine
    • By Tom Brine 7th Oct 17, 5:48 PM
    • 57 Posts
    • 18 Thanks
    Tom Brine
    • #6
    • 7th Oct 17, 5:48 PM
    • #6
    • 7th Oct 17, 5:48 PM
    Yes I agree I am of the opinion that my dividends would now be better paid as cash in order to fund the share dealing charges.

    I did pay the 0.1 dealing fee yes.

    I have come to the conclusion that the share dealing price is indeed a good deal compared to the market. However my monthly purchase plan suddenly does not make much sense under that set up.

    The question of do I need an ISA is interesting. Looking at the Baillie Gifford share plan there are no charges bar the stamp duty and dealing fees which would allow me to make monthly investments much as I do now. There is however a withdrawal fee which I don't currently have. Some more research is required.

    Im also thinking should I pay a large lump sum now whilst I have the good set up I have before Fidelity switches to its new platform. An imminent holiday is making that far from easy.

    Thanks for all of your responses.
    • choochootrain
    • By choochootrain 7th Oct 17, 6:56 PM
    • 182 Posts
    • 133 Thanks
    choochootrain
    • #7
    • 7th Oct 17, 6:56 PM
    • #7
    • 7th Oct 17, 6:56 PM
    It would be nice for Cavendish to also contact their customers directly about the new charging structure. I too received this letter from Fidelity today but the Cavendish website makes no mention of the changes.
    • Tom Brine
    • By Tom Brine 7th Oct 17, 7:50 PM
    • 57 Posts
    • 18 Thanks
    Tom Brine
    • #8
    • 7th Oct 17, 7:50 PM
    • #8
    • 7th Oct 17, 7:50 PM
    It would be nice for Cavendish to also contact their customers directly about the new charging structure. I too received this letter from Fidelity today but the Cavendish website makes no mention of the changes.
    Originally posted by choochootrain
    Especially with the huge difference it means to some of their customers. If you only deal in funds its fine, If you are on one of their IT or EFT "funds" and a small time investor it's massive! Are you in a similar position?
    • choochootrain
    • By choochootrain 7th Oct 17, 8:11 PM
    • 182 Posts
    • 133 Thanks
    choochootrain
    • #9
    • 7th Oct 17, 8:11 PM
    • #9
    • 7th Oct 17, 8:11 PM
    Especially with the huge difference it means to some of their customers. If you only deal in funds its fine, If you are on one of their IT or EFT "funds" and a small time investor it's massive! Are you in a similar position?
    Originally posted by Tom Brine
    Yeah, it was one of the better platforms for those holding smaller amounts in ITs. At £10 per transaction I'd have to be buying or selling £10,000 worth at a time to equal the old 0.1% fee. I'm going to contact Cavendish to confirm the changes in dealing fees before making any decision.
    • AlanP
    • By AlanP 7th Oct 17, 9:40 PM
    • 938 Posts
    • 643 Thanks
    AlanP
    There was a situation a year or so ago where Fidelity bought a £45 charge in, didn't apply for those going through Cavendish so certainly worth checking the new charges do apply to you.
    • greendoor665
    • By greendoor665 7th Oct 17, 10:38 PM
    • 25 Posts
    • 37 Thanks
    greendoor665
    I got the letter from Fidelity, read 'share dealing' and thought "this doesn't apply to me" and filed it. This thread has made me re-open it!

    I just opened an ISA through Cavendish with a lump sum and am planning to invest another lump sum in December. If the new charges apply to Cavendish investors then it looks like for this I'll be charged £3 instead of 0.1%. Luckily that's not too much more with the amount I am planning to invest, but that's only because I am buying just 1 ETF (along with funds).
    • Tom Brine
    • By Tom Brine 8th Oct 17, 5:14 PM
    • 57 Posts
    • 18 Thanks
    Tom Brine
    I have today placed an order for £500 worth of Scottish Mortgage IT shares and it is still going through under the original pricing method. I assume this will be the case until my account is moved to the new platform at "sometime in October or beyond".

    I will give Cavendish a call in the morning to confirm whats happening. I am now thinking I will retain the shares in the ISA but not purchase any more on a monthly schedule. To make a one off purchase in the future will cost £3.00 through my advisor or £10 if I carry out the buy myself (seems odd the difference and I will confirm how that works with cavendish).

    I will switch the regular payments to an accumulation fund where I will not get the transaction charges, probably one of the vanguard life strategies or a cheap FTSE tracker. The SMIT shares will remain held and dividends will be swapped to income to pay the fees. (I didn't buy the shares for income, I brought them for growth prospects)

    Ill update if I get any info from Cavendish
    • choochootrain
    • By choochootrain 9th Oct 17, 1:19 PM
    • 182 Posts
    • 133 Thanks
    choochootrain
    From Cavendish customer support:

    "Our understanding with Fidelity FundsNetwork was that our clients will pay the fixed £3 dealing charge for ETPs and investment trusts and not the higher £10 but we have only just been made aware of the information in the letter Fidelity FundsNetwork have just sent to clients and so we are getting this clarified with Fidelity FundsNetwork and how this will work. This does not affect the normal funds, i.e units trusts and OEICs.

    These changes are due to be introduced when our clients are moved to the new platform at the end of November or early December and have been introduced as they are going to be offering shares next year."
    • choochootrain
    • By choochootrain 9th Oct 17, 5:06 PM
    • 182 Posts
    • 133 Thanks
    choochootrain
    From Cavendish customer support:

    "Our understanding with Fidelity FundsNetwork was that our clients will pay the fixed £3 dealing charge for ETPs and investment trusts and not the higher £10 but we have only just been made aware of the information in the letter Fidelity FundsNetwork have just sent to clients and so we are getting this clarified with Fidelity FundsNetwork and how this will work. This does not affect the normal funds, i.e units trusts and OEICs.

    These changes are due to be introduced when our clients are moved to the new platform at the end of November or early December and have been introduced as they are going to be offering shares next year."
    Originally posted by choochootrain
    Further correspondence:

    "...we have just had it confirmed from Fidelity FundsNetwork that if you make lump sum payments you will pay a £10 dealing fee on ETPs and Investment Trusts rather than the £3 as you will being doing your own investment and it will not be through a broker, as we are execution only brokers and are not allowed to do this for you. You would pay £1.50 for monthly payments or reinvestments.

    These changes are due to be introduced when our clients are moved to the new platform at the end of November or early December, we do not currently know the exact date."
    • Tom Brine
    • By Tom Brine 9th Oct 17, 5:24 PM
    • 57 Posts
    • 18 Thanks
    Tom Brine
    Ouch. That's a game changer then. They confirmed to the tune of your original message on the phone with me earlier. But your second update means if I want to buy more SMT shares, which I do. I need to move. I would have swallowed a £3 fee every once and a while for a bulk purchase, £10 I won't.

    Have to start looking at alternative options. What a shame as I'd found the service really quite good.
    • greendoor665
    • By greendoor665 9th Oct 17, 6:55 PM
    • 25 Posts
    • 37 Thanks
    greendoor665
    That's a real PITA for me as I just opened my ISA with Cavendish and the main reason was that the low platform fee and low dealing charges made it cheapest for holding a mixed fund and ETF portfolio. That's now possibly not the case. I may move my ISA elsewhere before I invest another lump sum... I will need to look onto this more over the next month.
    • choochootrain
    • By choochootrain 9th Oct 17, 7:21 PM
    • 182 Posts
    • 133 Thanks
    choochootrain
    Yep, bit of a bummer. I've already put my deals in for tomorrow and will probably just hold ITs (if any) on a separate platform.
    • Tom Brine
    • By Tom Brine 10th Oct 17, 9:19 AM
    • 57 Posts
    • 18 Thanks
    Tom Brine
    It sounds like we have to late November at the earliest to take advantage of the current set up. My £500 was priced yesterday and should complete today. I then have a monthly £125 to go out in October and November which should avoid the change over.

    I have been looking at some alternative options and have found the following.

    IWeb - £25 to open. £5 per trade no admin fees. Has a from to transfer current ISA. If I opened this I could make two purchases a year for £10 and then only have SMT's fee and stamp duty to pay on top
    X-O - Free to open. 5.95 per trade. Can find nothing on transferring current ISA
    • Deaner666
    • By Deaner666 10th Oct 17, 2:46 PM
    • 1 Posts
    • 0 Thanks
    Deaner666
    OP in addition to what you mention you were also paying a 0.1% fee each time you dealt in an IT.
    Originally posted by A_T
    Not if you hold the ISA with Cavendish Online. Historically all dealing fees have been waived.

    EDIT: Retracted - just read that as "trusts" not "invesment trusts". ITs do indeed attract the fee as you say.
    Last edited by Deaner666; 10-10-2017 at 3:36 PM. Reason: Missed quote
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