Platforms are under growing pressure to ditch exit fees after TD Direct Investing removed the penalties as part of an overhaul of its pricing structure.
The execution-only broker previously charged investors £25 per holding to transfer out of stock, while Isa transfers incurred a £50 plus VAT penalty. In addition, Sipp transfers were subject to a £75 plus VAT charge and a £25 per holding fee.
All of these charges have now been removed.
TD Direct Investing boss John Tracey says lack of transparency, complexity, cumbersome transfer processes and high exit fees “erode people’s trust in DIY investing”.
He says exit fees are not a source of “significant revenue” for the firm and calls on others in the industry to follow suit.
A number of platforms, most notably Hargreaves Lansdown, continue to penalise clients when they leave.
Hargreaves Lansdown head of communications Danny Cox says: “We are committed to driving down the cost of investing. However, until the rest of the industry upgrades to electronic systems as we have done, conducting stock transfers is a little like trying to telephone someone who doesn’t own a handset. This means the majority of transactions still have to be performed manually, and this inevitably costs more money.”
The Platforum head of direct Jeremy Fawcett says: “Platforms argue that they incur material costs when clients exit but that is less the case now that electronic re-registration is more prevalent.
“We are probably approaching a tipping point in D2C where those who charge large exit fees begin to look out of step.”