14th November 2009
Deal of the week
Share dealing for £8
What’s the deal?
SimplyStockbroking is a new online dealing service that charges a fixed £8 commission for trades in UK shares, including Aim quoted companies. Some foreign shares can also be bought and sold at the same rate. There are no management or inactivity fees, and investors can also deal by telephone for £8.
The broker levies a dividend collection fee of up to £1 per distribution, based on 10 per cent of the net payout and with a 25p minimum. Investors also earn iPoints shopping rewards: 100 iPoints when they open an account, then 10 points every time they trade.
The firm was launched earlier this year, initially offering a certificated dealing service charging between £5 and £25 per trade. It is privately owned by its directors, who include former executives of retail brokers Selftrade and City Deal Services.
Is this good?
£8 is among the cheapest dealing commissions from any broker. Investors are not required to make a certain number of trades a month or quarter to qualify. Buy-and-hold investors are also not caught by inactivity fees. SimplyStockbroking will shortly launch an individual savings account (Isa) with no management fee that charges the same flat rate £8 for trades. The iPoints loyalty scheme is a bonus, though each trade earns the equivalent of just 5p in rewards.
What’s the catch?
The dividend collection fees could add up. An investor holding 10 shares, each paying half-yearly distributions of £10 or more, would be charged £20 a year on top of dealing costs. The broker’s service and proprietary platform are also unproven.
What’s the alternative?
Interactive Investor has a flat £10 commission rate and charges no management or inactivity fees. Its investment service is provided by Halifax Share Dealing, which charges £11.95 to its own direct customers.