‘Smart Investor’ launch angers Barclays’ DIY investors

When Barclays Stockbrokers announced that its DIY sharedealing service would become part of a more broad-based retail investment platform, customers were promised lower charges and enhanced tools and technology; its ambition was to reach beyond its traditional share dealing customers and engage a wider audience with a funds based proposition.

However, the recently launched Smart Investor platform has angered many of its 200,000 customers because for sophisticated stockbroking clients the new service could actually be more expensive, while lacking many of the trading functions that active share investors use to run their portfolios.

Clients and assets totalling £14bn were migrated to Smart Investor over the August bank holiday weekend, but many clients have been unable to login and the new website has experienced a whole range of problems from incorrect stock pricing and error messages.

When the platform was rolled live on Monday August 28th, large numbers of Barclays Stockbrokers customers still had not received log-in details for the new service and those that had returned error messages when they tried to log in.

Those that got in found that transactions were missing from their accounts, stock prices and portfolio valuations were incorrect and dividend payments were either late or missing.

‘transactions were missing from their accounts, stock prices and portfolio valuations were incorrect and dividend payments were either late or missing’

Such was the volume of calls, customer services were taking an hour to answer frustrated customers and the bank was forced to disable its online chat service to deal with the volume of complaints.

Barclays subsequently said that it was working to fix technical issues resulting in error messages and price discrepancies, and that only a minority of customers had requested new log-in details; additional call centre staff has been drafted in and a special dealing line has been established for customers experiencing issues.

However, Stockbrokers’ customers chagrin goes beyond these technical glitches.

In an attempt to simplify its platform Barclays has scrapped or altered a host of features which has alienated many of the active share dealers that made up its traditional customer base and as a result DIY Investor has been told of high volumes of transfer requests from other brokers.

Barclays’ relatively sophisticated investors could traditionally access functions such as live intraday stock pricing, tickers and could amend stop-loss orders; these have now been removed, as has the ability to trade overseas shares and covered warrants or the ability to administer accounts on behalf of a spouse or third-party.

Barclays claimed that the core of the service remained the same, despite the fact that its ‘look and feel’ had changed; so, is the problem just that it failed to set reasonable expectations or communicate effectively? Those facing increasing charges would argue not.

The new platform is designed to attract new investors, and in particular fund investors, but many share traders with large portfolios face higher annual fees.

Previously, Barclays Stockbrokers customers paid a flat account management fee of £36 per year to hold shares, plus dealing charges; Smart Investor will levy a percentage-based fee on the value of their portfolio – 0.1%on shares, and 0.2% on funds – with a minimum charge of £48 per year.

Online dealing charges have been reduced to between £1 and £6, depending on the type of investment, but these are charged on top; someone with a £200,000 share portfolio making 12 trades a year will pay £272 p.a. on Smart Investor compared with £179.40 previously.

It is a move that is certain to alienate many traditional Barclays Stockbrokers clients, fund investors should benefit as in most cases, they will pay a lower annual fee than before; as dealing fees have been reduced, buy-and-hold fund investors who trade infrequently will generally benefit.

It could be argued that Barclays is merely future proofing its business in a sector that has notoriously fine margins and that by reaching out to a new audience is helping to engage larger numbers of investors.

‘certain to alienate a number of its traditional clients in the hope that it can grow its business elsewhere’

Experience suggests that DIY investors are very sensitive to price increases, but those deciding to vote with their feet may not find it easy to transfer out of Smart Investor because a backlog has caused delays of between six weeks and three months before they can exit.

This is surely something that will fan the flames of discontent, and others that requested to transfer out earlier in the year claim to have been locked out of markets and unable to trade; Barclays said that its block had now been removed, allowing customers to trade by phone and that those with holdings that would no longer be supported were given plenty of notice to transfer out.

Receiving brokers have reported that the backlog of claims means it takes three times as long as usual to receive a response from Barclays to process transfers and that large numbers of requests are being received.

Whilst the transfer to Smart Investor may provide an object lesson in how not to do it, it does appear that Barclays’ decision is a calculated one that is certain to alienate a number of its traditional clients in the hope that it can grow its business elsewhere and more fully integrate it into its banking business; time will tell the wisdom of that, but it would gel with the increase in broad-based wealthtech propositions.

Those experiencing problems should contact the bank in the first instance on (0800) 279 3667 free or (0141) 352 3919 from a mobile, or via the live chat function is also up and running again.

Those who feel they have suffered a financial loss can lodge a complaint with the Financial Ombudsman, (0800) 023 4567 although they must first have spoken to Barclays.