INVESTOR'S CHAMPION - 'Breaking the rip-off brokers'
SHARES MAGAZINE - 11/12/03

By Malcolm Stacey

What is going on in the dark, faceless realms of online share dealing? Despite the fact that private punters are trading again in droves, the little monkeys are not passing on the benefits to the customer. They still charge the same old lofty commissions, even though they must be coining it in.

You could understand their bulky fees during the lately dufunct three-year bear market. That was when private investors were frightened of selling too cheaply and scared of buying as prices continued to wobble; and they avoided brokers as mice avoid rats.

But those days are gone and we are all buying and selling again with fervour. So are bulky commission rates coming down? Are they Bucknall Abbey. Even worse, we are now expected to pay extras charges, which are nothing to do with commissions. For the ugly 'inactivity fee' is with us. No matter if you have had serious illness, redundancy or domestic strife, somebody at your brokers will quietly take away money from your account if you haven't traded lately. Where else do you get charged for not using a service? Then there are the quarterly 'administration' fees. This is where you think you've found a broker at the cheap end of the market. Until you wake up in a sweat six months later, and realise that the management charge means you're actually paying well over the odds.

If your broker owns up to a mistake - and you often have to spot these errors yourself - then you can get a generous free trade. Rarely do you get more than that. This happened to me recently with a big old broker I still use now and then. But the promised concession just never happened. I could not be bothered to follow it up. And that's the problem, we never can.

The offers and tricks employed to try and wrest some more of our hard-earned cash from us seem endless. Some brokers charge a high commission rate, but will reduce it (slightly) if you do a lot of trades. The trouble is that this is just like buying a rail ticket these days: not everyone can work out exactly how much they are paying - it’s all so complicated. Such twists and turns do not make for a fast efficient service. They can also make the site unreliable. And isn't that all you need when your favourite stock suddenly plunges like an anvil over Niagara Falls?

There are a few sites that keep share trading simple and cheap. They get thousands more accounts and satisfied punters, then they can drive the prices down even lower. When all brokers start to charge reasonable rates again, then share dealing will really pick up in this country.

Yet the big expensive internet brokers will not go away. Because most of us, sadly, are 'inert' and we fall victim to 'inert selling'. We will not change brokers from an old, established, over-charging company to a new one, although it costs us heavily, and although we know that all online brokers in the UK (overseen by the FSA) are safe with our shares and cash. But progress will come, albeit gradually - because share dealing in this country cannot forever remain in the hands of fusty old giants, who will not change their ways - or their fancy prices. Eventually, we armchair tycoons will grow more streetwise.

Contact the Sharecrazy Press Centre
Back to Press Centre List