TIDMAJB
RNS Number : 5234W
AJ Bell PLC
12 December 2023
12 December 2023
AJ Bell plc
Price reductions and increases to cash interest rates
At its annual results last week, AJ Bell plc ("AJ Bell" or the
"Company") stated its intention to continue with its philosophy of
sharing economies of scale with customers as it grows. Today the
Company confirms a significant package of pricing changes it has
been working on for some time that will benefit its customers by
around GBP14 million per annum. These changes were factored into
the financial guidance the Company provided at its annual results
last week.
The FCA's guidance to the industry on retention of interest
earned on cash has provided clarification on the expectations of
firms in this area. Fair value should be assessed in the context of
the overall costs and service provided to customers and should be
understood by consumers in line with the Consumer Duty. In that
regard, platforms' use of cross subsidies can reduce core platform
charges and deliver significant benefits to retail customers where
firms believe it is right to do so.
Michael Summersgill, Chief Executive at AJ Bell, comments:
"Our philosophy has always been to share our economies of scale
with customers as we grow - an approach that is very much aligned
with the Consumer Duty. We announced GBP5 million of price
reductions for our customers last year and have increased our
interest rates on cash balances several times as base rate has
increased.
"We have been planning these latest pricing changes for some
time. Now we have clarity from the regulator, we are pleased to
confirm another significant package of pricing changes which will
benefit our customers to the tune of GBP14m a year. It is clear
platforms are able to use cross subsidies where they do so to
deliver fair value to customers across their entire proposition.
So, as well as improving the competitive rates of interest we pay,
we are also reducing our dealing charges for D2C customers and
reducing the custody charges advised customers pay.
"The financial impact is fully factored into the guidance we
provided in our annual results last week and our enhanced
competitive position puts us in a great place to continue to grow
our market share."
The full detail of the pricing changes is provided below.
Pricing changes
With effect from 1 April 2024, AJ Bell is making several price
reductions for customers investing via its platform in the
Direct-to-Consumer (D2C) and Advised markets, alongside increases
to the interest rates paid on cash held by AJ Bell's D2C
customers.
D2C platform (AJ Bell)
Trading fees
The costs customers pay to buy and sell exchange traded
investments (Shares, ETFs, Investment Trusts and Bonds) via the AJ
Bell D2C platform are being reduced from GBP9.95 to GBP5.00 per
trade. The dealing charges for frequent traders* will reduce from
GBP4.95 to GBP3.50 per trade.
Cash interest rates
Cash held on the AJ Bell D2C platform is readily available for
customers to invest or withdraw and in most cases represents a
short-term position while customers wait for investment
opportunities. This can differ for pensions, particularly where
customers are approaching or in retirement, as they will often hold
larger cash balances to fund short to medium term income
withdrawals.
AJ Bell is therefore introducing higher rates of interest on
cash held in pension drawdown, ranging from 3.45% for balances
below GBP10,000 to 4.45% for balances over GBP100,000.
It is also introducing higher rates of interest paid on large
cash balances held in both ISAs and pensions in accumulation of
2.70% and 3.95% respectively. A full table of the new interest
rates is provided below.
Interest rates paid on cash via the AJ Bell D2C platform - the
rates in bold text are new and come into effect on 1 April
2024:
ISA SIPP (accumulation) SIPP (drawdown)
First GBP10,000 GBP100,000+ First GBP10,000 GBP100,000+ First GBP10,000 GBP100,000+
GBP10,000 to GBP10,000 to GBP10,000 to
GBP100,000 GBP100,000 GBP100,000
----------- ------------ ----------- ----------- ------------ ----------- ----------- ------------
1.95% 2.45% 2.70% 3.2% 3.70% 3.95% 3.45% 3.95% 4.45%
----------- ------------ ----------- ----------- ------------ ----------- ----------- ------------
AJ Bell does not apply its annual platform custody charge to
cash balances.
Advised platform (AJ Bell Investcentre)
Annual custody charges
A number of reductions are being made to the annual custody fees
for investing via the Funds and Shares Service (F&SS):
* A new tier from GBP0.5m to GBP1.0m is being
introduced with a lower annual charge of 0.175%
(currently 0.20%)
* The annual charge for assets between GBP1.5m and
GBP2.0m is being reduced to 0.075% (currently 0.10%)
* The annual charge is now capped for all accounts with
assets over GBP2.0m
Charge tier Current charges Reduced charges from
1 April 2024
Assets up to GBP500k 0.20% 0.20%
------------------- -----------------------
Assets from GBP500k
to GBP1m 0.20% 0.175%
------------------- -----------------------
Assets from GBP1m
to GBP1.5m 0.15% 0.15%
------------------- -----------------------
Assets from GBP1.5m
to GBP2m 0.10% 0.075%
------------------- -----------------------
Assets over GBP2m 0.00% to 0.025% 0.00%
------------------- -----------------------
The reduction in the custody charge adds further value for
advised clients in achieving a very competitive overall net outcome
when considering the impact of interest paid on typically smaller
cash balances and the custody charges applied to other assets. AJ
Bell Investcentre does not apply its custody charge to cash.
Fixed charges
In addition to the above, two fixed charges are being
removed:
-- SIPP in-specie transfer-in charge (currently GBP60 + VAT)
-- Conversion of a SIPP into a Retirement Investment Account (currently GBP75 + VAT)
*Defined as a customer that places 10 or more trades in the
preceding month.
Contacts:
AJ Bell
-- Shaun Yates, Investor Relations Director +44 (0) 7522 235
898
-- Tom Selby, Director of Public Policy +44 (0) 7702 858 234
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END
STREADAAFANDFFA
(END) Dow Jones Newswires
December 12, 2023 08:33 ET (13:33 GMT)
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