LLoyds Share Dealing Review
Our take: Lloyds Share Dealing is an old school yet cost-efficient platform for regular investors with good ETF availability. It is an excellent option for investors wanting to sleep tight given the standing of the Lloyds Banking Group in the UK.
Our assessment: Lloyds Brokerage business scores 4.0 on an absolute basis, given the support of the systemically important bank and competitive fees for regular investing. It scores a bit lower at 3.8 in its category, as all its peers are large Banks, so bank safety plays a second role to fees, which are high outside of regular investing service and platform.
Is it suitable for you?
- Passive Investors: The financial stability of the company, along with the low custody fees, ease of establishing automated and free investments via monthly standing orders, as well as the good choice of products, enhance its appeal for buy-and-hold investors in plain vanilla ETFs.
- Semi-Active Investors: The selection of stock exchanges and foreign products is satisfactory, but the fees for investing in international stock exchanges and currencies may seem high. The lack of junior accounts can also be annoying for some.
- Advanced Investors: Lloyds Share Dealing lacks in offering leverage and features like access to US ETFs, which could limit those looking to expand their investment strategies. However, it does give access to the bond markets. Additionally, active investors may find the trading costs dissatisfying, and the investment platform may be considered outdated.
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Pros & Cons and suitability
Pros & Cons
- Long standing, listed & rated bank
- Good ETF and Stock Exchange availability
- Competitive fees
- No Cash Interest
- Interface is basic
- High FX Fees
- Lacks advanced features
Suitability
VERY Suitable
SIMPLE, reputable, competitive
Suitable
Good Product offer but high FX fees, and high fees for non-regular investing
SOMEWHAT Suitable
Lack of Advanced Features
Availability
Lloyds Share Dealing is only Available in the UK
Broker Snapshot
Lloyds Share Dealing Is Part Of A Traditional Banking Group
Lloyds Share Dealing is the investment platform for the Lloyds Bank group and is operated through Halifax Share Dealing Service, a branch of the Lloyds Banking Group. The group is a major and historically significant financial institution in the UK, listed on two stock exchanges and rated by three rating agencies. As of April 2024, Lloyds Group was valued at £33 billion. Lloyds Share Dealing belongs to a bank that has been in the industry for centuries and has a transparent fee structure, making it competitive towards Tier 1 brokers like Hargreaves Lansdown and much more affordable than brokers from similarly large, established banking groups like HSBC Invest. However, since brokerage is non-core to Lloyds business, the platform is less modern and advanced compared to Tier 1 brokers.
Long standing Bank, Listed and Externally Rated
Lloyds Group has an IG rating from S&P, Moody’s, and Fitch, and is a leading and highly profitable financial institution in the UK. It holds the distinction of being the second oldest bank in the country. Like all brokers, it offers client protection up to £85,000 under the Financial Services Compensation Scheme and is regulated by the FCA.
Company Info
| Characteristic | Lloyds Share Dealing |
|---|---|
| Inception Date | 🛈 1765 |
| Headquarters | 🛈 London, UK |
| Key Owner | 🛈 BlackRock, Inc. (8,1%), Vanguard Group, Inc. (4.7%), Harris Associates L.P. (4.5%) |
| Bank Affiliated | ✅ Yes |
| Listed on Stock Exchange | ✅ LSE / Nasdaq: $40.91 bn (LLOY/LYG) |
| Parent Rating | ✅ S&P BBB, Moody A3, Fitch A |
| Operating Profit | ✅ £5.5 bn |
Regulation
| Feature | Lloyds Share Dealing |
|---|---|
| EU Entity | 🛈 None |
| UK Entity | 🛈 Halifax Share Dealing Limited |
| Key Regulators | ✅ UK |
| EU Regulator | N/A |
| UK Regulator | ✅ UK (FCA) |
| EU Guarantee | N/A |
| UK Guarantee | 🛈 Max. £85k |
competitive fees, high eTF availability and low custody fees
Lloyds Share Dealing, which shares a platform with Halifax and iWeb, offers extensive ETF and international stock exchange access. The fee structure is appealing if you use the regular investing service, but it does not offer SIPPs. Accounts do not earn interest on cash, and high foreign exchange rates make trading in international products less advantageous.
Features
| Feature | Lloyds Share Dealing |
|---|---|
| Key Base Currencies | 🛈 GBP |
| ETF Availability | ✅ High (700) |
| Multicurrency | ❌ Not Available |
| Cash Interest | ❌ No |
| Margin Loans | ❌ Not Available |
| Exchanges | ✅ LSE, Nasdaq, Major European |
| External PFOF Reliance | ✅ None |
Fee Structure
| Feature | Lloyds Share Dealing |
|---|---|
| Custody Fees | ✅ Low |
| Inactivity Fees | ✅ None |
| ETFs Dealing Fees | ✅ None (for regular investing) |
| FX Fees | ⚠️ High |
| Deposit Fees | ✅ None |
| Withdrawal Fees | ✅ None |
| Security Lending | 🛈 Not Available |
I. Company
Lloyds Share Dealing has a well-established, listed, and IG rated parent company. The Bank is a systemically important institution (O-SIIs) in the UK and has been bailed out during the GFC. Despite its solid financial standing, it has been involved in some scandals in the past few years, which did not affect the brokerage business clients.
Business Profile
Lloyds Share Dealing operates exclusively in the UK and, as a tax-efficient account, offers ISAs only. While the platform is open to anyone, it primarily caters to customers with a Lloyds Bank account, for whom it is easier to open a Share Dealing Account and transfer funds. Otherwise, Halifax Share Dealing and iWeb Share Dealing are the true investment branches of the Lloyds group, offering easier access and SIPPs options. The company is relatively transparent about its revenue sources, primarily earning through cash interest (not shared with investors) and transaction fees (if you do not use the regular investing service). FX fees are also high, making it another form of income for the company. Information related to assets under administration and the number of customers is not separated from those of the group; therefore, they are not publicly available.
Ownership and Transparency
Lloyds Share Dealing Service is operated under the umbrella of Lloyds Banking Group but specifically managed through Halifax Share Dealing Limited, a wholly-owned subsidiary of Lloyds Banking Group plc. This company handles the share dealing services for both Lloyds Bank and Halifax, leveraging the infrastructure and regulatory framework established by Lloyds Banking Group. Thus, while the service operates under the Lloyds brand, the administrative and operational aspects are managed by Halifax Share Dealing Limited.
Halifax Share Dealing Limited was established in 1997 and has its registered office in Leeds, England. The company is registered in England and Wales and is authorized and regulated by the Financial Conduct Authority. As part of Lloyds Banking Group, it benefits from the group’s extensive resources and market presence.
Lloyds Banking Group PLC, listed on the London Stock Exchange under the ticker LLOY, and on the NASDAQ under the ticker LYG holds a significant presence in the financial sector with an IG rating from all three rating agencies. As of April 2024, Lloyds Banking Group has a market capitalisation of $40.91 billion. It is also part of FTSE 100. In 2023, the company reported a profit after tax of £5.5 billion, a increase of £1.5 billion compared to 2022.
Safety Considerations
The credit rating is in the BBB or A category, which implies a very low estimated probability of default at parent level, as measured by historical 10-year peer cohort probability of default. Based on historical data, a couple of 100 similarly rated financial companies went out of business over a 10-year period. Additionally, there is a precedent of the Lloyds Group being rescued by the UK government. In September 2008, at the height of the financial crisis, Lloyds TSB agreed to acquire Halifax Bank of Scotland (HBOS) that was on the verge of collapse due to its exposure to the failing mortgage market and a resultant liquidity crisis. This deal was encouraged by the UK government, which was desperate to prevent the systemic failure of the banking system. In 2009, the State acquired about 43% of total ownership, which was then fully resold to private shareholders by mid-2017. Lloyds is a systemically important institution (O-SII) in the UK.
Regulation & Investor Compensation Schemes
Share & Cash Custodians
Equiniti Financial Services Limited is both the cash and share custodian. Personal CREST accounts are not supported.
Reputation
Where Lloyds group has in general a solid reputation, as April 2024, The UK’s Financial Conduct Authority (FCA) is investigating Lloyds Banking Group’s anti-money laundering measures, focusing on its compliance with British regulations and the FCA’s principles of business. This scrutiny comes as British authorities seek to strengthen oversight of money laundering, particularly in London, amid concerns about its status as a major hub for illicit funds.
Lloyds Banking Group has been involved in several other controversies, including facilitating sanction evasion for Iranian entities or accusations of tax avoidance. Lloyds introduced a Sharia-compliant Islamic Account in 2014, which faced criticism for potential religious discrimination. The bank was also connected to the HBOS Reading fraud scandal. More recently, its overdraft fees policy was criticized for not aligning with regulatory recommendations.
II. Fee structure
Lloyds Share Dealing offers a straightforward fee structure favorable for investors who use the regular investing service. It is competitive across all account types (but does not offer SIPPs). However, its FX rates are high compared to the market.
Platform fees
Lloyds Share Dealing’s fee structure is designed as follows:
- For Share Dealing ISAs and Share Dealing Trading Accounts: £40 a year (charged every 6 months in April and October). If you have both accounts, Lloyds charges you just once. For Premier and Private Banking customers, the charge is just £20 a year.
- For SIPP Accounts, 0.25% of the value of your Investments (charged monthly up to a maximum of £16.50 a month).
- Invest Wise and Invest Wise ISA Accounts (18-26 years old only): no charge.
Trading Commisions
Lloyds Share Dealing trading fees are as following:
- ETF & Shares Trading Fees: flat rate of £11 per transaction (or £10 for Premier and Private Banking customers). For other markets, the charge is £0 but with 1% of FX fees. For frequent investors (more than 8 transactions a month), the transaction is £8 per trade.
- Mutual Fund Trading Fees: £1.50 per trade.
- Regular Trading Fees: always free.
- Dividend Reinvestments: 2% of dividend (max £10.00).
Overall Fee Simulation vs Competitors
Most of our readers have simple Index portfolios. Using our Broker Total cost calculator, you can estimate the total cost of holding ETFs throughout the investment period. For our simulated scenarios:
- General Accounts – Lloyds Share Dealing comes out competitive
- ISAs – Lloyds Share Dealing comes out competitive.
Fee Simulation For General Accounts
In the below simulation, a 20-year accumulation period broker bill for a Lloyds Share Dealing account comes out at £800. The cost is £0 for Hargreaves Lansdown as the broker does not charge any custody fees for ETFs and £5,860 for Barclays Smart Investor. For all three brokers the calculator assumes the use of regular trading service that is free. Note that ISAs and General accounts have the same cost for both Lloyds Share Dealing and Barclays Smart Investor.
Investor assumptions
| Model Feature | Assumption |
|---|---|
| Investor | UK |
| Instrument | UCITS ETF |
| Account | General |
| Initial Investment | £ 100,000 |
| Monthly | £ 1,000 |
| Time Horizon | 20 years |
| Gross Return | 8% |
Total Fees
Fee Simulation For ISAs
In the below simulation, a 20-year accumulation period broker bill for an ISA account comes out at £800 for Lloyds Share Dealing, £900 for Hargreaves Lansdown, due to yearly custody fees capped at £45, and £5,860 for Barclays Smart Investor. As for General Account, for all three brokers, the calculator assumes the use of the regular trading service, which is free.
Investor assumptions
| Model Feature | Assumption |
|---|---|
| Investor | UK |
| Instrument | UCITS ETF |
| Account | ISA |
| Initial Investment | £ 100,000 |
| Monthly | £ 1,000 |
| Time Horizon | 20 years |
| Gross Return | 8% |
Total Fees
Fee Simulation For SIPPs
In the below simulation, a 20-year accumulation period broker bill for a SIPP account comes out at £3,960 for Lloyds Share Dealing, very close to the £4,000 for Hargreaves Lansdown, and £8,335 for Barclays Smart Investor. As for General Account, for all three brokers, the calculator assumes the use of the regular trading service, which is free.
Investor assumptions
| Model Feature | Assumption |
|---|---|
| Investor | UK |
| Instrument | UCITS ETF |
| Account | SIPP |
| Initial Investment | £ 100,000 |
| Monthly | £ 1,000 |
| Time Horizon | 20 years |
| Gross Return | 8% |
Total Fees
Currency Exchange fees
Lloyds Share Dealing’s currency exchange fees are high at 1%.
Other fees
Deposits and withdrawal are free of charge.
III. Platform & Features
Like Halifax and iWeb, Lloyds Share Dealing has a straightforward – but old-school – interface, ideal for beginners. It offers access to various international stock exchanges and a diverse range of products. However, the platform may feel outdated and could be restrictive for advanced investors, and the mobile app is available only to customers who also hold a bank account. Lloyds Share Dealing does not pay interest on cash held in your accounts.
Account Opening Process
Opening an account with Lloyds Share Dealing may be longer if you do not have an account with Lloyds bank.
account Features
Lloyds Share Dealing shares the same investing platform as Halifax and iWeb and offers several great features for Long-Term Investors:
- Foreign Stock Exchange: NYSE, NASDAQ, Xetra and Euronext (Milan, Amsterdam, Paris, Brussels).
- Standing Orders: those are particularly advantageous because they do not incur in trading fees.
- Free Share Transfer
- Mobile App only for Bank customers: if you have a regular Lloyds bank account, you can use the same app to trade with Lloyds Share Dealing. However, if you only have the investment account, Lloyds offers the web platform only.
Internalisation and PFOF
PFOF is not allowed in the UK therefore Lloyds Share Dealing does not engage in this practice.
Cash Interest
Lloyds Share Dealing does not pay cash interest.
Advanced Features
Lloyds Share dealing prioritizes simplicity and user-friendliness, with a focus on traditional investment products. As such, it does not offer advanced trading features like Futures, Options, Derivatives, and Margin Loans, catering more to investors looking for straightforward investment options. Below a summary of the available investment types:
Features
| Investment Type | Availability |
|---|---|
| ETFs | ✅ |
| Stocks | ✅ |
| Bonds | ✅ |
| Funds | ✅ |
| Options | ❌ |
| Derivative | ❌ |
| Futures | ❌ |
| CFDs | ❌ |
| Forex | ❌ |
| Crypto | ❌ |
| Commodities | ❌ |
IV. Taxes
Tax Wrappers
As tax wrapper, Lloyds Share Dealing offers ISA and SIPP accounts.
Tax Reporting
Lloyds Share Dealing provides tax reports, however the reporting functionality to the tax authority is not automated and is responsibility of the individual investor.
Good Luck and Keep’em* Rolling!
(* Wheels & Dividends)
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