Most UK investors are paying hundreds of pounds more than they need to in platform fees each year, according to the first ever ‘Fat Cat Index’ from IG.
IG’s analysis exposes a significant price gap between major UK investment platforms for Stocks and Shares ISAs, revealing that over half (52%) of investors are currently using the market’s 12 most expensive providers*. Platform costs vary significantly based on trading frequency. To account for this, the analysis categorises investors into three profiles: Passive (1 trade/month), Medium (3 trades/month), and Active (6 trades/month).
For an ‘active’ investor using a Stocks and Shares ISA with one of these platforms, the cumulative fees would be £515 more per year than if they used one of the market’s low-cost alternatives. For active investors using one of the four most expensive platforms, the average annual overpayment rises to £711. Over a 40-year investing lifetime, this would amount to almost £28,440 in avoidable costs, based on today’s fees and not accounting for lost compounding.
For less active investors, the costs are still significant. The average ‘passive’ investor using one of the 12 higher-cost platforms would still pay £263 more per year than if they used one of the market’s low-cost alternatives, while for those making three trades per month, the figure is £357.
Table showing what different types of Stocks and Shares ISA investors are overpaying
| Investor profile | Baseline annual cost (average of 5 cheapest providers) | 12 most expensive platforms – average overpayment | 4 most expensive platforms – average overpayment | Most expensive platform – overpayment |
| Active (6 trades p/m) | £54 | £515 annual overpayment | £711 annual overpayment | £922 annual overpayment |
| Medium (3 trades p/m) | £49 | £357 annual overpayment | £459 annual overpayment | £567 annual overpayment |
| Passive (1 trade p/m) | £44 | £263 annual overpayment | £344 annual overpayment | £404 annual overpayment |
Millions of customers are in the dark on fees
Alongside the index, IG surveyed UK retail investors with a Stocks & Shares ISA, with results revealing a significant knowledge gap on fees. Nearly half (47%) say they have never calculated their total fees, and the same proportion (47%) reports being confused by investment fee jargon, such as FX spreads and tiered charges. Despite this, more than half (55%) are confident they are paying the lowest possible fees – a reflection of the difficulty customers face in understanding what they’re actually paying.
Switching feels like a hassle
The research also found that nearly half (48%) of investors hesitate to switch providers because of the ‘life admin’ involved. This inertia is particularly pronounced among older investors, with 43% of over-55s having been with the same provider for more than 10 years, and a third (34%) of this age group saying they are unlikely to switch.
Michael Healy, Managing Director, UK & Ireland at IG Group, comments: “Most retail investors in the UK are being ripped off – paying hundreds of pounds a year in fees for a service they could access for far less by switching platforms. While investing was once expensive, it’s no longer the case, and there’s no reason for customers to miss out on compounded gains by paying through the roof in annual charges. That’s why we are calling on all UK investors to check their fees.
“We understand that investment fees can be complex. Between transaction charges, platform fees, subscriptions, and tiered pricing, it’s not always easy to work out exactly what you’re paying or to compare providers. But the likelihood is that if you’re paying multiple charges to invest, you’re probably paying too much. So if you can do just one thing this year as an investor, get on top of your fees – even small differences can make a huge impact over a lifetime.”
* Among those included in the index
**‘12 most expensive’ refers to the 12 highest-cost providers under the active investor assumptions. Because dealing/FX costs scale with activity, the composition/order of the highest-cost set can vary across passive/medium/active scenario.
