The DIY investment industry has taken on bad habits

Moving your share portfolio between platforms can be a smart move. But since the big players have taken on the banks' old tricks, mind you don't get fleeced doing it.

In this week's magazine (out on Thursday), I write about the endless efforts of our big banks to avoid having to actually compete on price. They look like they are trying to do so they keep cutting headline mortgage rates and raising headline savings rates but look at the reams of terms and conditions that come with any given product and you will see that the best buy rates are only the beginning of the deal.

Almost all savings accounts come with bonus arrangements that only last 12 months and most mortgages come with ludicrously high "arrangement" fees, all of which make attempting to compare products based on their advertised rates to be all but impossible. It's very irritating.

Even more irritating, however, is the way in which this need to impose endless extra cost is embedded throughout the industry. I moved an Isa recently and was pretty shocked by the cost of doing so. It seems I am not the only one.

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A note from this morning points out that some of the big players in the DIY investor market place are taking on the old tricks of the industry. How? Exit fees.

All platforms (on which you hold your shares or funds in an ordinary account, Isa or Sipp) are obliged to let you transfer your assets to another company as they are. This means you don't have to take on the costs of selling and buying back your holdings, and should, in theory, make the whole thing cheap and easy.

So, if you are with one provider but happen to note that another is a whole load cheaper (something the Retail Distribution Review is making increasingly possible), you can just move on. The problem is that the platforms don't like you moving on. They like you to stay with them. So, it is in their interest to find a way to make moving less desirable. Which is exactly what they do.

Want to close an Isa at Barclays Stockbrokers and take it elsewhere? That'll be £60 for the closing and £30 for each transfer. If you have 15 holdings in your account, the move is going to cost you a total of £510. Not so tempting any more is it? At £20 a transfer it is cheaper to leave Alliance Trust Savings (although given how cheap their service is you might not want to leave), at £10 it'seven cheaper to leave Charles Stanley but others come in more expensive TD Direct charge £35 per transfer.

The providers will say that there is admin expense involved in shifting portfolios and that they are entirely entitled to claw that back. Fair enough. But given that the charges for this admin range from £0 a holding (Cavendish Online) to £35, you might also think that some providers are both taking a final bite at each investors cherry and, as the note says, also "doing their best to discourage exits to more competitive providers."

Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.