The company has also cut some fees charged to consumers and advisers.

The moves follow an FCA intervention this week asking providers to avoid retaining cash interest from clients for cross-subsidy or other purposes, although AJ Bell says the changes were planned before the FCA announcement.

For its direct consumer customers, the firm is raising rates on cash held in pension drawdown after noting that some of this cash is held for long periods before being invested.

AJ Bell is introducing higher rates of interest on larger cash amounts held in pension drawdown, ranging from 3.45% for balances below £10,000 to 4.45% for balances over £100,000.

Some changes will not take effect until April, however.

AJ Bell is also introducing higher rates of interest paid on large cash balances held in both ISAs and pensions in accumulation of 2.70% and 3.95% respectively. 

Interest rates paid on cash held on AJ Bell D2C platform (rates in bold and underlined are new and begin on 1 April):

Source: AJ Bell  

AJ Bell does not apply its annual platform custody charge to cash balances.

For its advised platform (AJ Bell Investcentre), there will be changes to annual custody charges with a number of reductions made to the annual custody fees for investing via the Funds and Shares Service (F&SS):

The firm says that a new tier from £0.5m to £1.0m is being introduced with a lower annual charge of 0.175% (currently 0.20%). The annual charge for assets between £1.5m and £2.0m is being reduced to 0.075% (currently 0.10%) and the annual charge is now capped for all accounts with assets over £2m.

AJ Bell Investcentre New Custody Charges

Source: AJ Bell 

On fixed charges, in addition to the changes above, two fixed charges are being removed:

• SIPP in-specie transfer-in charge (currently £60 + VAT)
• Conversion of a SIPP into a Retirement Investment Account (currently £75 + VAT)

Some other D2C trading charges are also being reduced.

This week the FCA wrote to chief executives in the industry asking them to ensure that the benefit of higher cash interest rates was passed on to customers quicker and in a fairer way. AJ Bell said it had been working on its rate and fee changes for “some time” and they will benefit its customers by around £14m per annum.

The company added that the FCA’s guidance to the industry on retention of interest earned on cash has provided “clarification” on the expectations of firms in this area.

AJ Bell CEO Michael Summersgill said: “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 £14 million 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.”