AJ Bell is set to increase the interest rate it pays on cash balances, a move which it claims will benefit its customers by £14mn a year.
The announcement came hours after the FCA wrote to investment platforms and Sipp operators setting out concerns with the way they deal with interest.
The changes at AJ Bell will include a higher rate of interest on pension drawdowns for 3.45 per cent for balances below £10,000 and 4.45 per cent for balances over £100,000.
For Isas interest will be 1.95 per cent for the first £10,000 and 2.45 per cent for balances up to £100,000 and 2.70 per cent for more than £100,000.
Michael Summersgill, CEO at AJ Bell, said: “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 £5mn 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 £14mn 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.”
On the direct to consumer platform, trading fees will be reduced from £9.95 to £5 per trade, while dealing charges for frequent traders, those who placed 10 or more traders in the previous month, will drop from £4.95 to £3.50.
The changes are expected to apply from April 1, 2024.
tara.o'connor@ft.com
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