Why does it take so long to move an ISA?

I have an ISA with iii, who jacked up their prices, in particular charging for funds and generally carrying on in a cavalier fashion. So more than a month ago I initiated a shift to TD Direct, telling both iii and TD, and filling out the relevant forms. iii at least revoked their exit charges for aggrieved customers transferring out who didn’t like the unilateral hike in fees.

So far, the transfer still hasn’t competed, though it is within the specified time of six weeks. What the heck is the reason in this day and age for a transfer to take so long? I am transferring as stock rather than cash, but I now have an additional challenge in the form of a share certificate from one of my sharesave schemes that I want to shift into the ISA. I don’t dare put any money or stock into the TD ISA while the iii one still has anything in it, for fear of being hauled up by HMRC for double dipping. In fact all in all the process of transferring share accounts, within or without an ISA seems tediously drawn out and grief-stricken.

I have a ESIP shareholding with Equiniti that I want to shift to TD in a non-ISA wrapper because Equiniti have outrageous selling fees that are avoided by transferring out within 90 days of vesting. However, The Firm’s shares are going XD in a few days and I’m avoiding a move over the XD period. There still seems plenty of opportunity for the transfer to make a right muddle of things between the XD and dividend payment date in a month’s time.

What I need is a good Coffee Can

The whole point of nominee shareholdings was to make computer transfers easier, but my experience of the ISA transfer is beginning to piss me off about holding shares in this way. If I can’t find a way to transfer the sharesave amount into my ISA I will hold the damned thing as a share certificate; it’s a large enough holding to be worth a grand a year in dividend income. The stock is good enough for Neil Woodford’s top ten which my HYP seems to have ended up being perilously similar to so it’s good enough for me as a core holding.

Although paper is so yesterday, it has some attractions – it doesn’t mess you about to change nominee accounts and it doesn’t charge you any quarterly account fees. Account fees seem to be where nominee share accounts are going to – and I have become accustomed to not having them over the last few years. Guess I was freeloading on all the guys holding active funds, and this cross-subsidy is being banned by the Retail Distribution Review, which as an unforeseen consequence is going to shift the balance from electronic to paper for long term holdings. For a share that I’m going to sit on for a while as I build up my HYP ISA around it to get my sector allocation back into line there’s much to be said for paper. What I now need is a good can to stash these in, as described by Robert Kirby in his 1984 article ‘the Coffee Can portfolio” – basically stick share certificates in can, collect £1500 a year tax – free (when the second sharesave comes out in December to join this one) and forget about the tin. He said in 1984

You can make more money being  passively active than actively passive

Something the III experience has shown me is I want some diversity in nominee providers, and having no nominee for a significant holding is one step towards that. That way if I fall out with a nominee provider I don’t end up with my entire income stream held up to ransom. This isn’t easy with small accounts of < £10k each because you often get tapped with account fees below a certain size (with TD it seems to be £7500), and ISAs in particular are a pain to have spread around. However, I’m out of that limitation now, and after next year I will probably leave my HYP as it is and switch future years contributions to some sort of Vanguard lifestrategy fund if RDR hasn’t made funds expensive to hold. That will probably necessitate starting up with a different ISA provider to get access to the Vanguard fund.



Interactive Investor wind their necks in about exorbitant charges

Not as far as reversing the exorbitant charges, but at least to let you show a clean pair of heels at no cost…

Looks like the angry hordes of Monevator’s men and Martin Lewis’s moneysaving experts have brought some pressure to bear in iii, formerly known as a reasonably good deal execution only broker until chief exec Tomas Carruthers and his band of merry men had  brainstorming meeting on the topic of ‘how can we make more money’ resulting in a sudden rush of blood to the head and this arrogant missive to the punters.

They’ve shown some contrition vis-a-vis their previous customers, who were hacked off at being charged £15 per line of stock to get the hell out of there. They’ve softened their tune. This is what their website http://www.iii.co.uk/landing/new-pricing said at 19:00 7 June 2012 (just in case they change it)

Transfer charges

We are confident that for the majority of our active investors our new pricing plan represents great value and is highly competitive.

There are many other customers who will find that by consolidating some of their investments with us they can further benefit their position. For investors who wish to transfer any holdings into our account we will cover transfer charges up to a limit of £100.

However, having listened carefully to our customers, we understand some of our customers have decided to move to providers who do not cover transfer charges, and some are reconsidering their financial strategy and now wish to close their investments entirely.

We have no desire to profit from customers who wish to close or transfer their account, and want to ensure all customers have an absolutely fee-free exit route.

We apologise for any undue concern or inconvenience that customers in this situation may have had.

We would like people to take the time to fully assess our offer and to consider the positive impact this could have to their investments.

If you do decide to leave us, though, please call us on 0845 200 3637 by 31 July 2012 and we will ensure you have a fee-free exit.

You can now git for nothing. Which is an improvement on the previous state of affairs, where an Ermine was going to have to eat a £225 hit to clear off with my 13 lines of stock and two index funds. It’s cheaper to eat the transfer charge than take the £10 sell charge on iii and the £10+ charge of rebuying plus the 0.5% stamp duty. Which is A Good Thing.

III are still desperately arrogant and think their customers are stupid however. In their advertising they trumpet that the FT made them Deal of the Week on the 2nd of June. I don’t know what they were smoking or whether money changed hands because my freebie FT articles are used up. More disingenuously, iii then chortle about kudos from Which magazine in May

what others are saying about iii (www.iii.co.uk/landing/new-pricing on 7 June 2012)The May issue of Which magazine ranked us first out of 23 fund supermarkets. See a summary of the report online at the Which Magazine website.

Well Tommo Carruthers, one of the biggest downers you did was start charging dealing fees for funds, punk, so Which magazine was reviewing on data that is now false. To wit-


Ermine annotated copy of Which website about iii

Strangely enough iii’s link to which didn’t work so this one probably won’t either. I got there by searching for fund supermarket on Which’s site. I took that snapshot on the 7 June 2012 at 19:40.

So what exactly is the point of index funds in today’s market then, when ETFs give you an immediate price as opposed to forward pricing?

I’ve gone right off funds, from this experience. From my POV the whole point of buying funds was you could do it in itsy-bitsy pieces over time pound cost averaging and all that jazz, and the absence of dealing fees was what made it possible. If you’re going to be eating dealing fees on iii then heck, just buy the ETF a good honest share. Looks like fund buying is either going attarct dealing costs or going to have to be purchased in much bigger lumps than £100 or so.

So I investigated TD, because several people recommended them from my earlier snarl about this, and then TA from Monevator delivered the ultimate recommendation. So I opened a regular account with them to test the water before moving. Only to find they are fee-free on funds, but you have to buy funds in £500 lumps so some of this idea goes west. Fair enough, maybe that’s taking the piss, but even so, with £10k a year ISA allowance you’re only going to be able to get 20 slots so better not be trying to pound cost average more than two funds eh? TD do also support a regular investment which is batched on two Wednesdays a month where the limit is lower but you have to set up a steady payment. My income will be more variable so I don’t want to do that, I’ll still invest the whole ISA in a year but want to be in charge.

What was nice about iii was I could buy £100 of HSBC FT allshare index each month  and £100 of Legal and General Global every other month dealing charge free. All that’s been canned now.

From a fees POV I’d be okay with staying on iii and simply selling out my funds and considering buying an ETF say six-monthly on the £1.50 batch job price. However, iii have done a classic example of how not to change fees. It doesn’t affect me enough to want to move on its own, but the arrogant cockiness of Tomas Carruthers in his original mail telling me how I should trade just doesn’t make me want to do business with them.

III also made a right pig’s ear of switching from a Halifax white label dealing platform to their own, they take ages for dividends to show up and the latency of fund purchases (from order placing to execution) has become glacial relative to the current febrile state of the markets. However the real reason I want to move is that I don’t like the reports of the unsatisfactory financial state of the company. I’m too tight to buy the Companies’ House report on them to substantiate the claim but added to Carruthers’ bad attitude I don’t want to be there any more. So hello TD here I come. At least it shouldn’t cost me anything to switch. And TD seem to limit their transfer out and close cost to £55 at the moment, which beats iii’s original £225 exit charge.

All of this seems to have come about because the FSA is trying to stop companies using kickbacks and backhanders from actively managed funds to reduce platform costs. Investing is going to get a little bit more expensive and a little bit more inconvenient from here on because this subsidy is going away. Gee thanks a lot, guys.


The Ermine takes the shaft from the RDR and the FSA

Stirred from its long slumber of ages, the Financial Services Agency has decreed that trail commission has been a scam. And that It Will Stop, Forthwith.

And I’ve just taken the shaft. Not in a huge way, but it still pissed me off. I’ve always been a firm believer that organisations that charge me money just to hold an account with them are taking the mickey and to be avoided. I don’t mind paying for a service when I use it, but paying just because the account exists hacks me off.

Which is why I’ve used iii for my ISA. You can get more touchy-feely service with the likes of Hargreaves Lansdown but in the end as Monevator/TA keep on reminding us, fees kill your returns.

III didn’t charge any annual fees and their per-trade charges of £10, while not the lowest were reasonable. It appears what made this possible was the trail commission on active funds paid by other people 😉

I was dismayed to receive a missive (appended at the end of this post) to the effect that iii were going to charge £80 annually as well as £10 per trade. Geez. Thanks, guys. The only thing that is stopping me telling Tomas Carruthers to stick his fees where the sun doesn’t shine is that all other ISA platforms are probably either dearer or moving to charging annually (many others do). It is only when all this kerfuffle has settle down in a year or so that it’s worth looking at alternatives.

Moving a S&S ISA is a major pain, because you usually get ripped for a transfer cost per holding. So you have to sell everything down to cash, so a S&S ISA transfer to new provider, and then recreate your ISA on the new platform. Or not, if you come to the conclusion you don’t want the same holdings though then you should ask yourself the question why didn’t you change this on the old platform 😉

That of course invokes two lots of dealing charges plus a 0.5% hit on the total value from stamp duty. Even in the case of my modest 30k ISA that alone is a £150 hit, so in practice S&S ISAs are sticky because of the cost and hassle of moving. You can open another one for future year’s ISAs, but rebalancing across such an ISA estate gets hard and it’s all a right pain.

There are other subtle changes here. For instance I will get right out of funds on iii as they are now charged at the same rate as ETFs. I will sell my HSBC FTAS trackers holding I have built up over the last year or so and buy the corresponding Vanguard ETF product. The historical fund preference over ETF logic because of the absence of trading costs has now been eliminated, and the forward pricing model of funds is not worth tolerating so I may as well minimise the TER.

I may have to find another platform and use DW’s ISA allowance to implement this approach to Grexit  – I was about to start doing it for European index funds in my iii ISA but that’s been KO’d now. Of course, there are no guarantees that another platform may not do the same as III and start charging dealing charges on funds, so all in all I could have done without the friendly help of the FSA’s RDR to queer the pitch at this interesting time. Perhaps RDR will hammer the very raison d’etre of index funds as opposed to ETFs.

Anyway, here’s what III have to say:

Dear Ermine,

Here is a message from the CEO describing just how we are going to obfuscate our previously simple offering to you. We will obscure things by bundling some services, charging more for others and complicating the process of comparing our charges with other ISA providers. Of course we are going to make out that we are doing you a favour, but basically we want you to trade a lot more often so as we get more money. Geddit? No, well, what we will do is charge you for two trades a quarter, constraining what you can do, and enticing you to churn more. Oh and we’ll wrap it all up in fluffyness of how we believe in the stuff we’ve been forced to do. Unfortunately, Mr Ermine, you weren’t using any of the funds that we were stealing some of the proceeds from every year, because you identified them as a ripoff. So you get to take the shaft, this time, buster. That OK with you? Because if not you know what you can do but it’ll cost ya. Bwahahahahahaha

Obviously they didn’t say that, and dressed it up somewhat, but I think my version is more succinct a summary 😉 I’ve critiqued the Tomas Carruthers’ missive describing how I will be shafted in future using this colour.

Dear Ermine

Thank you for investing with Interactive Investor. More than ever individuals need to take increasing control of their own financial futures as successive governments and employers reduce their responsibilities in this area.

At Interactive Investor we consider it our duty to provide you with the dealing tools and information you require to actively manage your financial future, to do so with confidence and charged at a fair price. This is why we are now announcing important changes to our charging structure to take effect from 1 July 2012.

Funny you should say that, Tom old boy. Maybe the Ermine is getting a bit simple in his old age, but no annual fee and a straight £10 a trade charge or £1.50 batch trade sounded a lot more like a fair price than £80 a year whatever I do even if I don’t trade at all. This. Is. Not. An. Improvement.

New Pricing Changes

We are introducing a quarterly fee of £20, which gives you:

The first two real time trades (funds or equities) you make in each quarter, or

A combination of regular monthly investments and real time trades up to the value of £20 in each quarter.

To buy or sell funds we are introducing the standard charge of £10 for a real time trade or £1.50 for regular monthly investments.

Well that’s just pissed on the fireworks of this idea then, looks like IG index or another ISA provider may get that business instead.

We will pass on to you ALL income we receive from any fund investment you hold with us. On a typical fund with a 1.5% Annual Management Charge, this would be 0.64% of your investment every year

This is in addition to our existing highly competitive pricing that you will continue to benefit from:

  • Buying or selling shares at £10 per real time trade or £1.50 for regular monthly investments
  • International share trading also at £10
  • Our frequent trader rate, which allows you to buy or sell shares from just £5

Why introduce a £20 quarterly fee?

We believe that customers should be engaged with their investments and actively manage their portfolios. To support this, we are introducing a quarterly fee of £20. This fee is the only one we will charge you and you will not have to pay any other management, ISA or administration fee.

Ermine thinks to himself don’t bullshit me Carruthers, you’ll still charge me a dealing fee, which is not what the only fee we will charge you used to mean when I went to school!

If you already trade twice or more a quarter then this fee will make no difference to what you pay – it is effectively an advance payment of those first two trades for the quarter. If you are trading less than that then you will still have the right to your two trades in each quarter without any additional payment and hopefully feel encouraged to more actively manage your investments.

Well if you don’t mind me saying, Carruthers, you are a most impudent little toe-rag telling me when and how often I should trade. While I am in no way a passive investor, I aim to be a catatonic trader once I am fully invested, and that decision is up to me, not up to you you slimy little berk. Have you ever heard of Warren Buffet’s 20-ticket punch card investing model, ya sonofagun?

We will, of course, continue to provide you with the day-to-day custody services, including corporate actions and dividend processing, regardless of the investment types you choose.

We will repay all income we receive from your fund investment

We are not alone in believing that ongoing commission does not fit with independent investing. The FSA is banning it for investment business introduced by financial advisers from 1 January 2013. The FSA has not yet banned this income for execution only business, so we are leading the way by passing on all income that we receive back to our customers.

Writing, meet Wall is what I think you meant to say here Carruthers. Did it ever occur to you that salami-slicing your customer’s property would normally be considered stealing in any other walk of life? Howsabout you give me 1% of your income to Ermine Enterprises, after all, I enable your nice li’l lifestyle Tom? No, thought not. So why did you think this was okay until you got told not to, hein?

Still, it’s nice to see an old lag reformed, I guess, amazing what a little bit of heavy-handed regulation does to a chappy caught with his hand in the till. Any other offences you’d like the court to take into consideration?

Our competitors may repay a portion of the income they receive but do not always make it clear how much they are keeping.

No, you weren’t that clear on that front either until your Damascene moment, oddly enough coinciding with  when the FSA made you do it. Funny old world, Carruthers, isn’t it?

We will pass on ALL of the income we receive on your fund investments. This can make a significant difference to your overall returns, for example:

If you invested £10,000 each year for the next ten years, the rebate you’d receive with Interactive Investor would be worth £3,520. After 20 years, the total rebate would be £13,440. See how much you can save with our income rebate calculator

Oddly enough this calculation never appeared before as the fact that some iii customers have been ripped to the tune of £3k over the last decade. It really is a strange world we live in today, don’tcha think, Tom?

If you have fund holdings elsewhere, you can benefit even more by consolidating your fund investments with us.

You do not need to take any action as these changes to pricing will take place automatically with effect from 1 July 2012. You can find out more information and contact details from the FAQs on our site.

Continuing to improve our service to you

We will also continue to introduce special trading days, new tools and research for trading customers to further support informed and confident trading decisions. For example:

  • Our free ISA and free US stock trading days
  • Our new mobile trading app available on iPhone and iPad being introduced this summer
  • Privileged access to trading insights and new tools coming later this year
  • Our recently launched model portfolios which invest in a range of different assets – and we’ll continue to expand this range

All set up to jolly us along to trade more on the old ‘special offer everything must go’ model? What happened to the old KISS model you used to run round there parts?

When we set up Interactive Investor 17 years ago it was to let private investors control their own trading activities and financial future – something that barely existed at the time.

Hmm, and I was such a cynical sonofagun as to be under the impression you were in it for the money you could rake off rather than as such a social service. Life’s such a bitch when you’re so misunderstood Carruthers.

Nearly two decades later the investing landscape has changed beyond recognition. We intend to stay at the forefront of that change and work on your behalf to give you better trading access, information, value and service.

We look forward to supporting your trading and investment plans now and in the years to come.

Yours sincerely


Tomas Carruthers