iii Interactive Investor stealth charges?

Abe121

Interactive Investor appear to have a clever trick to rip off legacy customers who happen to hold shares through them. In July 2012 they introduced a £20 quarterly fee, but they never send invoices or notify clients of the charges. Instead, they quietly deduct the fees from any cash clients have in their account, and then they carry on accruing debt but not notifying them. They don't send clients postal notification about the charges accruing, or any emails. Instead, they expect clients to log on to their web site to see if there are any charges. By the way, when you log on, their “Overview” screen does not include any line items for charges so you have to pro-actively search for the charges (Statements page). When you find it, they have a clever trick here – the default view only shows the past month, so you likely would not see the charges there unless you change the settings. The other option is to search for any new messages in their "secure messaging" section, and then scan through the junk mail to see if there are any charges. They do not notify customers of new "secure messages" via email so you have to remember to log on regularly to check. If not, they quietly take your funds and accrue charges in secret. Then, bingo, when they've taken all their client’s cash and the outstanding total charges exceed £100 they finally decide to notify the client by post. The brief letter tells you they will sell your shares to recover the money, but doesn't tell you the amount outstanding or include any kind of invoice (in my case, their first contact was 22 months after they started charging and I later found out the charge was £180). They then sell some of your shares without authorisation to pay themselves. If, like me, you have a small shareholding, then the costs are punitive.

I can understand that active traders should log on to see what’s happing with their account, but for me, and many thousands of others, iii was initially an investor blog in the late 90’s and when they started to offer to buy and sell shares we may have had a small holding with them. In effect, the account was seen as an “electronic share certificate”. Therefore I, and many others, were dependent on iii notifying us of any charges.

In my case, they had an opportunity on each billing occasion to send me a postal notification of charges, but failed to do so. They were able to see from their online account access records that I had never viewed the charge details and could have made reasonable efforts to contact me as a result, but failed to do so. They could have contacted me by phone or post as soon as the available cash funds ran out, but failed to do so. They instead allowed debts to accrue without any attempt to notify me until they sent their FIRST notification letter in May. Had I been aware of the charges I would certainly have closed the account as soon as they informed me.

I used their online "secure messaging" service to raise the matter, but they also appear to have got this wrong too! You have to log in to their online system, to CHECK if they have sent you a reply - unlike most other online businesses, they do not notify you via email that you have any new messages.

Their trading practices appear to fall well short of the Financial Conduct Authority requirements. Over 760 formal complaints were raised with Interactive Investor Plc in the first 6 months of 2013 alone.

In the light of recent mis-selling scandals, it seems iii should have re-assessed the suitability of their financial product (in effect, a new product) in light of the changes to their charging strategy and notified ALL customers with “dormant” accounts that the product was no longer suitable.

Having raised a formal complaint which they rejected, I am now going to the Ombudsman and FCA to hopefully get this sorted for me and others in a similar position.

If you search online for reviews of Interactive Investor you will see there are many other customers in a similar position. Please comment if you have had similar problems as this may help in terms of identifying the scale of the problem.

Thanks

masonic

I always get an email notifying me of new secure messages (including the secure messages notifying me when the charge is going to be taken). Do they have a valid email address registered for you and have you checked messages from them aren't going into your spam folder?

It's probably worth pointing out that platforms all charge an explicit fee now. You have the option at II to register a debit card and pay the fees that way when there is no cash on the account. Allowing the fees to accumulate to £100 before taking action is quite restrained (compare this with Hargreaves Lansdown who will sell holdings to cover their fees as soon as the cash on your account is depleted - and charge you a transaction fee when they do so).

bowlhead99

You may have missed the thousand-post thread that ran on here at the time. https://forums.moneysavingexpert.com/discussion/3990039 . There were lots of others.

It is not really true that they didn't notify customers of the changes. They told them by email when they were coming in. A number of people had their complaints looked at by FOS who sided with the company. However, from memory some people had a token goodwill gesture either before or after the FOS said they handled the complaints badly.

It is an online account. As you say, :

"iii was initially an investor blog in the late 90’s and when they started to offer to buy and sell shares we may have had a small holding with them. In effect, the account was seen as an “electronic share certificate”.

So basically they operated an online cheap as chips trading environment through which they maintained a nominee account for you, holding shares in their name and providing interactive online access/statements, for which you paid them no ongoing fees.

To stay afloat when offering investments that do not pay them kickbacks, they needed to introduce fees and announced the introduction of them (an annual charge with a certain amount of free trades per quarter) to their clients by email in advance, which sounds like an appropriate way for an online blog to communicate with its members and was presumably within their terms and conditions.

As they were one of the first movers in the "we're going to have to start charging something for our ongoing services" movement within the industry (retail distribution review), there was something of a consumer backlash and it was well publicised in financial media or newspaper money pages for the negative and positive aspects. Deal of the week in the FT, a month before the pricing kicked in.

You're unlikely to find forum members here who aren't aware that iii accounts carry fees. Presumably as you hadn't paid them, they now felt enough was enough and they should start sending you physical letters.

It's not for me to say how much customer service you ought to get from a free service (phone calls, letters, faxes rather than just emails notifying you of the fees being introduced and how they would be handled if you didn't have cash in the account?) but it's not very surprising that they didn't uphold your complaint because this is not a new issue for them. Any arguments about who is right or wrong will be considered, by them, to be done and dusted since they have been running for a couple of years with the new fee structure and dealing with people who don't like it.

So, of course "you owe us these fees" will be their stance. The FCA won't care or get involved. But perhaps the ombudsman will see things differently, good luck.

You mention that

Their trading practices appear to fall well short of the Financial Conduct Authority requirements. Over 760 formal complaints were raised with Interactive Investor Plc in the first 6 months of 2013 alone.

What proportion of transactions they carried out, or customers they have, does that figure of 760 complaints represent? They have several million users of their website but I don't know how many actual customers they have. The percentage might not be very high and so you might be a little off in your speculation that their trading practices fall well short.

And that is just the number of people complaining. People will complain about anything if there is money involved and they would prefer not to pay or would like to get some compensation for actual or perceived losses from someone. What proportion of the 760 complaints were upheld?

I think there is little doubt that they could have handled the situation better but it is difficult to keep customers happy when you stop giving them something for nothing.

masonic wrote: »

It's probably worth pointing out that platforms all charge an explicit fee now.

This is generally true although if you are just using share brokerage services and don't need a platform to carry OEICs and unit trusts, there are some providers without inactivity fees - who don't deal in funds or foreign shares or have fancy smartphone apps or advanced dealing features - who can make enough money from the people paying transaction fees for buying and selling, to support the people who don't trade very often. The execution-only specialists x-o.co.uk are one such firm which some people here use.

innovate

OP, you might find this FOS determination of interest: http://www.ombudsman-decisions.org.uk/viewPDF.aspx?FileID=34186

Abe121

Thanks for these replies which are helpful, and for your patience. @bowlhead99 sorry I missed the bumper discussion from 2012!

Obviously iii have the right to charge fees, and it's a business decision on the charging structure that works for them. If you are an active trader, the fees actually seem quite reasonable. Clients always have the option of accepting them or switching. My issue (perhaps not explained too well) is that I wasn't aware that fees and debt were accruing on a small dormant shareholding. I would have expected they would have at least recognised something was up when they weren't able to collect the fees and contact me by post or phone (my mobile number was registered with them) rather than waiting 15 months to rack up another £100 of debt before doing so.

@masonic. Thanks for sharing that you are receiving email alerts when there are new secure messages. A few weeks ago I checked the email address iii had on record and it was valid and correct. When I asked them to confirm they were sending secure message alerts to that email address, the customer service agent said “I have updated our records and verified your email address to ensure emails can be sent here in the future.” so perhaps it was not configured correctly before. The weird thing is that I have been receiving their “daily alert” market data emails for over a decade (of course these don’t include account or fee details) but I have never received any account message emails (I checked the spam folder too).

@innovate. Thanks for sharing the Ombudsman’s previous ruling. Based on this I don’t hold out much hope for a decision in my favour. At least I'm not the only one who failed to spot the charges and I guess it’s a reminder to be super-vigilant on any dormant investments or service registrations.

naedanger

Abe121 wrote: »

Thanks for these replies which are helpful, and for your patience. @bowlhead99 sorry I missed the bumper discussion from 2012!

Obviously iii have the right to charge fees, and it's a business decision on the charging structure that works for them. If you are an active trader, the fees actually seem quite reasonable. Clients always have the option of accepting them or switching. My issue (perhaps not explained too well) is that I wasn't aware that fees and debt were accruing on a small dormant shareholding. I would have expected they would have at least recognised something was up when they weren't able to collect the fees and contact me by post or phone (my mobile number was registered with them) rather than waiting 15 months to rack up another £100 of debt before doing so.

@masonic. Thanks for sharing that you are receiving email alerts when there are new secure messages. A few weeks ago I checked the email address iii had on record and it was valid and correct. When I asked them to confirm they were sending secure message alerts to that email address, the customer service agent said “I have updated our records and verified your email address to ensure emails can be sent here in the future.” so perhaps it was not configured correctly before. The weird thing is that I have been receiving their “daily alert” market data emails for over a decade (of course these don’t include account or fee details) but I have never received any account message emails (I checked the spam folder too).

@innovate. Thanks for sharing the Ombudsman’s previous ruling. Based on this I don’t hold out much hope for a decision in my favour. At least I'm not the only one who failed to spot the charges and I guess it’s a reminder to be super-vigilant on any dormant investments or service registrations.

If you believe you have been unfairly treated then you should, in my view, persist with your complaint (to the Ombudsman if necessary) as you have little to lose but the cost of a few stamps. Of course your complaint may not be upheld but it certainly won't be if you don't complain. Furthermore unless people complain when they feel they have been badly treated things are unlikely to improve.

The Ombudsman looks at each case on its own merits so the previous case does not mean you will automatically lose. If you did not receive any email notification (through no material fault of your own) when the new charges were introduced, or if that notification was unclear, then I would have though you should have a reasonable chance of your complaint being upheld. (I can't help feeling if it had been in III's interest to alert you of the charge increase they would have made more effort.)

Good luck.

matzuba

Did you complaint get anywhere? FO sided with II on my complaint