Freetrade quietly raises fees for Isa account holders

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Freetrade has quietly introduced a new fee structure meaning customers with a stocks and shares Isa will be hit with a 66 per cent rise in fees.

In a recent update to customers, Freetrade said the fee change structure was an ‘evolution of [the] freemium model’ and the new plans were ‘value-packed’.

There are now three subscription plans for Freetrade. Previously there were just two plans – Basic and Plus – with an extra cost of £3 per month for an Isa and £7 for a self-invested pension (Sipp).

The basic plan, which is unchanged, is free for all with access to a general investment account, commission-free trades and access to over 1,500 global stocks and ETFs.

The biggest change is the introduction of a standard subscription which costs £4.99 and includes an Isa, as well as the full access to 6,000 stocks which was not available before.

That means Freetrade customers who previously paid £3 a month for an Isa will have to pay an additional £1.99 a month if they want to keep their account – or £23.88 over the year.

Some customers on social media who have opened an Isa with Freetrade have already expressed frustration at the price increase.

A spokesperson for the company said customers will have a 60 day grace period in which customers consider whether they want to pay the extra £1.99 or move to a Basic plan.

The Plus subscription, which is unchanged at £9.99 a month, now includes a Sipp which was previously £7 alone. 

Customers will also earn 3 per cent interest on uninvested cash, up to a maximum of £4,000 with Plus and Freetrade is currently testing recurring orders in a beta version for Plus customers.

Adam Dodds, founder, said: ‘Our refreshed subscription plans offer customers a huge amount of value in a brokerage market that is still dominated by established players charging fixed commissions on each trade. 

‘Not only are such costs a barrier for those looking to begin investing, they create an enormous drag on a portfolio over time.’ 

The price rises come after a strong year for the investment app. Registered users in the UK reached more than 1.3million and revenue increased more than sixfold to £15.1million.

It means Freetrade* is starting to seriously compete with the likes of Hargreaves Lansdown*, AJ Bell* and Interactive Investor*.

AJ Bell this year launched its long-trailed new investment platform Dodl, which is cheaper than its traditional platform and charges no commission for buying and selling investments. 

Its offering is considerably smaller than Freetrade’s with just 50 UK shares and 30 funds currently.

Interactive Investor also recently slashed its share and fund dealing charges to stay competitive.

From 1 September, the standard online dealing charge for UK and US trades will be cut from £7.99 to £5.99 for ii’s standard Investor plan* as well its Pension Builder Sipp plan.

Despite becoming one of the most popular DIY investment apps among young investors, Freetrade was forced to implement a wave of redundancies that impact 15 per cent of its staff in June.

It came just weeks after Freetrade raised £30million through a loan agreement as it looks to continue its European expansion.

It is understood that the recent price changes have been in the pipeline since last year and have not been affected by these recent developments.

You can check out Freetrade’s new subscription plan fees on its website.