Charles Stanley have sent out a letter to all their customers who use Personal Crest accounts that in future they will be charged £504 per annum (inc. VAT). Although the company stopped offering the service to new customers some time ago, existing users have in some cases been paying nothing to be a Personal Crest member. They clearly want to get rid of all such users of their service, including those using the low-cost Chas Stanley Direct platform because £504 is not likely to be an economically justifiable fee for most people.
They claim in the letter that there is a gap between what they charge for the service and the effort and costs involved as a Crest sponsor. Is this really true though? Almost all stock market trades go through the Crest system whether you are in nominee account or Personal Crest account. So why should it cost more?
In reality they are probably just trying to “simplify and standardise their service to cut costs and improve the service to clients” as they recently announced. But there are major advantages to having a Personal Crest account. You are on the share register of the company so the shares are clearly owned by you unlike in a nominee account. In addition you get the dividends on the shares paid directly to you instead of it sitting in a broker’s account earning them interest rather than you. Clients would probably be willing to pay a reasonable fee for the service, but not £504.
The only saving part of the announcement is that they are offering a free transfer to another Crest sponsor free of charge. I imagine many people will take up that offer although there are not many alternatives. I suggest clients of Chas Stanley who are affected by this change also send in complaints about this change.
Roger Lawson (Twitter: https://twitter.com/RogerWLawson )
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I am not the MD of Charles Stanley Direct. I do not work for the company. Please can you amend your article.
I have removed your name, although someone of your name did have that role in Chas Stanley in late 2018 and your twitter feed suggests a link also. Did you used to work for them perhaps?
Yes I used to work for them but no longer do.
Thanks for your post Roger. Agree with your thoughts. This move looks like the death of personal crest accounts, as there are no really viable alternatives unless you know of a company offering the service that Charles Stanley has? I have always resisted going nominee (25+ years), but it looks like the few of us that use them have run out of road. To be fair, Charles Stanley have been making noises about this for at least the last 5 years, so I always thought we would get chucked out eventually. I guess the cost to Charles Stanley is in having a different back-office process. I will be calling them in the morning as this is a very disappointing move. I would have paid £250 for each of my two accounts, but £nil to £504 is a meteoric rise and what happens to the even fewer customers left in a year’s time? Otherwise Charles Stanley is an excellent broker. Customer Services is second to none and I am a shareholder as well. From a shareholder perspective their operating margins are too low and cost base too high..hence their announcement, I guess, on this and their new target operating model.
I agree with your comments other than the fact that I don’t think they need separate back office processes. It’s about money I think (interest on dividends received) and locking in their clients.
I have received notification of new charges from Charles Stanley, including £800 per annum + VAT for each Crest account (previously £240 pa + VAT). This is for accounts with a dedicated account manager. I guess £420 pa is for Charles Stanley Direct?
It seems to me the administrative ramifications of operating Crest should be the same for any type of client account. So the difference is pure price discrimination.
As it happens I was already in the process of transferring away from Charles Stanley to Redmayne Bentley, where my account manager is going. As this was initiated some time ago, Redmayne are not currently charging me for the Crest accounts. But the charges document on their website was recently amended to state a charge of £595pa + VAT, so I expect that now applies on new accounts.
I have heard there is something called the “Central Securities Depositaries Regulation” which will soon require brokers to reconcile accounts daily. This allegedly increases the burden of operating Crest accounts.
However as I have commented to Roger some years ago, the extreme difficulty in even finding information about personal Crest personal member accounts very much suggests a loose conspiracy between Euroclear, the registrars and brokers to run down Crest Personal Membership (but without the row which just announcing this openly would cause) . I have seen figures saying that at one time there there were 150k Crest personal member accounts in the industry; now there are less than 15k.
The process of attempting to transfer between brokers – the first time I have done this for many years – has very strongly confirmed to me the value of having a Crest account.
I tend to have quite a few delisted holdings with actual or potential value (eg formerly listed investment trusts in solvent wind-up). With my Crest accounts, all these holdings have been transferred seamlessly when the Crest sponsor changes. With nominee holdings (eg in ISAs), It has been VERY difficult to effect some of these transfers – I have had to personally intervene multiple times with the parties to the transfer and the registrars to persuade them all that the stock has residual value and should be transferred. And all this is with “old” broker fully solvent and operational and processing transfers as normal. I dread to think what it would be like if the broker was in some sort of difficulty.
I will continue to use Crest accounts wherever possible, even with significant fees.
Guy, your comments are very interesting. Certainly it is clear that Chas Stanley would like to get rid of personal crest account holders. Mark Bentley of ShareSoc is taking up this matter on behalf of all affect members.