Barclays removes account fee for retail investors

Barclays has ditched its monthly fee for retail investors in a major move which could save customers hundreds of pounds a year.

Customers using Barclays Direct Investing, formerly Smart Investor, previously paid 0.25% on balances up to £200,000 and 0.05% on anything more monthly, but will now pay nothing with immediate effect.

The removal of the monthly fee by Barclays means someone with a £300,000 holding will save £550 a year. Stacked up over a number of years and the savings could reach into the thousands of pounds.

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The cut applies to the trading platform fee and investors still need to pay FX charges, and fees for telephone trading and buying and selling stocks. Buying and selling funds remains free.

Sasha Wiggins, chief executive of Barclays Private Bank and Wealth Management, said: “By removing our Direct Investing customer fee, we are helping to make it more straightforward for people to take the next step and invest with confidence.”

Barclays’s decision follows several other providers responding to competition in the market by cutting fees.

Some providers have also come under pressure to reduce their fees as consumers wise up to the real impact on returns.

Earlier this year, Hargreaves Lansdown shook up its fee structure, including lowering its annual platform fee from 0.45% to 0.35%, which works out better for some customers.

In February, interactive investor (ii) introduced a new pricing plan which saw flat fees reduced on most accounts depending on their size (though some fees increased).

Holly Mackay, chief executive officer and founder of consumer advice website Boring Money, said the move from Barclays has seen it leapfrog Hargreaves Lansdown, ii, AJ Bell and Fidelity to join Freetrade as the cheapest platform in the UK for those holding funds.

Mackay said that because Barclays already charges no fee to trade funds, removing the account fee means “anyone buying funds who banks at Barclays already and has the app will struggle to make a case to buy funds anywhere else”.

“This is a very big move which will shake up the direct investing market. Barclays is drawing a bold line in the sand which will take the fight to challenger fintechs,” Mackay added.

“I think we’re entering a new phase of very strong competition and I would be very surprised if other big brand platforms didn’t respond.”

How does Barclays compare to other platforms after the change?

How Barclays compares to other platforms following the change depends on your holding and what type of investments you trade in.

According to analysis by Boring Money, for a customer contributing the maximum annual £20,000 into a stocks and shares ISA and buying two funds per year, the lowest cost providers are now Barclays and Freetrade (both £0).

Banks HSBC and Santander would cost £50 and £70, respectively, while Hargreaves Lansdown, ii and AJ Bell would cost £73.90, £79.86 and £53, respectively.

Boring Money also looked at annual costs based on trading ETFs. Based on eight trades per year, Barclays would cost £48 in total. This is based on each trade costing £6 and no monthly account fee.

AJ Bell would cost £82 per year and Halifax £112 per year.

Below is a breakdown of how much your annual platform fee would cost based on eight fund trades per year.

Credit: Boring Money (platform fee cost based on eight fund trades per year)

Do note, it’s worth factoring in other investment costs when deciding which platform is best for you, plus the choice of investments you’ll have on each platform.

While Barclays has ditched its monthly fee, customers have less funds to choose from compared to AJ Bell. Barclays customers can choose from around 2,500 funds but AJ Bell offers over 4,000 to pick from.