UK’s Bank Brokers: Which One Is The Best For You?
Definitive guide to brokerS FOR UK INVESTORS - Part 3
Welcome to part 3 of Bankeronwheels.com’s Definitive Guide to choosing a Stock Broker in the UK.
Investing remains an unchartered territory for most UK adults. Only 8% of them have a Stocks and Shares ISA. 97% percent of workplace pension account holders leave the money in the default option. A low growth, gloomy economic environment in recent years has not encouraged financial optimism. Narratives like ‘cash is safe’ or ‘investing is gambling’ are very widespread. The 2008 crisis did huge damage to the credibility of the financial services industry in the UK.
So why use a bank as a broker and who does this?
Bank brokers benefit from familiarity. The bank brands are visible, psychologically available and reassuring. You may have banked with Lloyds your whole life (I did from thirteen to my mid twenties). The big banks like Barclays, HSBC and the Lloyds Banking Group have tens of millions of customers and thousands of physical branches across the UK. You can’t walk around a town without noticing one. They’re as much a part of the furniture of the UK as Heathrow airport or Manchester United. They’ve existed for hundreds of years. Unless aliens land on the lawns of Buckingham Palace, people expect the banks will always be around. Furthermore, everyone with a job is already a user of a bank. It’s not a bold step into trusting a new institution to open your banking app and set up an investing account.
Today, let’s focus on Bank-Brokers in the UK.
KEY TAKEAWAYS
- Bank brokers are component parts of large, important, long-established institutions. Banks are not primarily stockbrokers – but some like those we reviewed have branched out into retail investing activity. The safety of Bank Brokers is a step above smaller, retail investor specific firms. Quite simply, the failure of a small stockbroker platform is a headache for its customers and regulator. The failure of a large bank by comparison is a major economic and political crisis.
- Business Models: Banks are profitable, viable businesses in today’s economy – but the sort of products we’re interested in represent a tiny fraction of their revenues. These are cross-sold products and not the core market of these institutions. Sometimes in this category we can benefit from cross subsidy, sometimes we lose from being cross sold sub-par services.
- Fees: Halifax and Lloyds lead the tier in terms of offering low, competitive fees. Other bank brokers are significantly behind their competitors in other categories of brokers in this regard.
- Platform Features: Bank brokers tend to offer a straightforward and essentials only approach to platform design. Some do not offer a mobile application at all, some only for those who have a current account with the bank.
- Tax Wrappers: Halifax is the only one of the banks reviewed which offers ISA, GIA and SIPP, all run by the same firm. Others disappointingly do not offer SIPP or outsource them to another firm.
Here is the full analysis
⚠️ Banker On Wheels Broker Classification System: Unsure whether a bank broker is for right you? Check this guide to UK Broker Tribes first.
Brokerage ARMs of Traditional Banks
Key category differentiator: Being Part Of A Banking Group
With all its pros and cons
Focus of this guide
To categorise brokers we use two dimensions:
- Pure Players vs. Banking Group Brokers – Pure players (right side of graph) are independent from a Systemically Important Banking Group. They specialise in brokerage business. They may have a banking licence, but these activities are non-core to the business, and not systemically important. Then, there are Brokers that are part of a Systemically Important Banking Group (left side of the graph). This is the focus of this article.
- Sophistication and Product-Suite – Brokers within a Banking Group can be broken down in two types – Traditional Broker Arms, for which Brokerage is a non-core activity and Direct (Fintech) Brokers – that have brokerage business at their core. They are typically fintech players backed by Banks. They exist in certain EU countries, but not so much in the UK.
common characteristics
What have bank-brokers in common?
Typically - Safety first, Platform sophistication last
These brokers are part of an established, and Systemically Important Banking Group. They are often rated, listed on a Stock Exchange, and transparent. However, they have several drawbacks.
Bank-brokers may be:
- Non-Core – typically an auxiliary service to the established Banking Group.
- Relatively Expensive – some may not be very competitive for long term investors.
- Lacking Depth Of Products – may miss access to some markets for advanced investors.
Pros & Cons
- Likely Systemically Important Bank
- Most likely Rated
- Most Likely on Stock Exchange
- Most Likely Transparent
- Limited feature set
- Limited tax wrapper availability
- May Be Expensive
- May Not Be Sophisticated
Suitability
Suitable
Good basic features, easily navigable platforms, powerful institutional backing.
Suitable
A good range of funds for interested cyclists to build their portfolios, at reasonable prices.
likely less Suitable
Not geared up for those who need the most advanced features
Why should you choose a bank-broker?
Safety: less anxiety over striking out into unchartered terrain
Bank brokers benefit from the familiarity factor.
Bank brokers benefit from the familiarity factor. They are highly visible, psychologically reassuring names. You may have banked with Lloyds your whole life (I did from age thirteen to my mid-twenties). The retail banking division of Lloyds banking group (comprising Lloyds, Halifax and the Bank of Scotland) has 27 million customers and over a thousand high street branches. Barclays and HSBC have tens of millions of customers and hundreds of physical locations each. You cannot walk around a medium-sized town without noticing one. They are UK cultural furniture, as much of a backdrop to life as Manchester United FC or Heathrow Airport.
They just exist - and existed for hundreds of years, including bailouts
They just exist – and have existed for hundreds of years. Despite wobbles during the 2008 financial crisis, they survived, even if some like had to be merged into others as in the case of Halifax and Lloyds. There is a widespread sense that excluding outlandish scenarios like aliens landing on the lawn of Buckingham Palace, the banks will always be around.
There’s a good chance your parents, spouse, business or friends use the same bank as you do. There’s less anxiety over striking out into unchartered terrain or trusting new organizations if you invest via the provider of your everyday banking or mortgage provider. If you trust them to safely hold your wages and keep the roof over your head, doing some investing isn’t so much of a stretch even if you’re nervous.
Predominately used by Gen X, Boomers and some millenials
- Age: 40s-80s
- Wealth: Moderate to high
- Sophistication: Low to moderate
- Counterparty Risk Aversion: High
Customers of the bank brokers are typically older, lower sophistication investors. Sector wide, bank customers aged under thirty are disproportionately users of app based neobanks like Starling, Monzo and Revolut. Those over that age bracket are more likely to be attached to and comfortable with a big-name bank. They value the familiarity and interoperability of accounts more than the greater range of options or elegant user experience of more modern standalone investment providers. Importantly, they’re investing for themselves, rather than managing investing accounts for younger family members. This does not mean that they are necessarily less wealthy than other investors, but they’re more cautious and usually less interested in the moving parts of personal finance. They’re not going to get excited when you tell them about a new ETF with lower fees. They have not heard of Mr. Money Mustache and probably never will.
three Key differentiating factors
safety
All reviewed Bank Brokers are regulated and Listed
The first line of protection for investors in the UK is the £85k per person, per institution, FSCS compensation limit. Ideally, we will never need to rely on this, but its existence is reassuring. Most customers of Tier 1 brokers will have investments significantly over this limit and cannot rely on it alone to safeguard their financial plans. We look at public listings, ratings from credit ratings Investing agencies, profitability and history as a guide to the direction and strength of the firm. his can’t give us certainty, only more or less confidence. All of our Bank Brokers reviewed are regulated by the FCA (for their activities in the retail investor space) and the Prudential Regulation Authority (for their commercial and retail banking activities). All are listed on the London Stock Exchange or (like the subsidiaries of the Lloyds banking group) have a parent listed there.
Fees
Some banks still charge unacceptable fees
Investing is about wealth preservation and growth. High fees for either platforms or trading hinder us in achieving these goals.
Platform features
Most platforms are still very old-school
We want to be able to navigate platforms quickly, locate investments and see performance data in a straightforward way. Poor platform design is an obstacle to the clarity we need as long-term investors.
additional consideration: Tax-efficiency
Tax-wrapper availability varies
We can successfully invest our money but see our gains eaten away by tax if we stray outside of the network of UK tax efficient accounts. See article 1 in this series for the impact capital gains, dividend and interest taxes make on investment returns! Limited account availability means complicating our financial life by using multiple platforms to cover our bases. Of course, not every investor needs every type of account, but availability is a strength.
How do key bank-brokers compare?
1. safety
- Gold: HSBC
- Silver: Barclays
- Bronze: LLoyds, Halifax & iWebb
The common thread running through bank-based brokers are the scale of the parent institution and the perception of security which accompanies that scale. All of the bank brokers we reviewed are (or have parents) listed on the London Stock Exchange. All have strong, multi-agency credit ratings and all have existed for well over 150 years.
Even the smallest and newest on the scene, iWeb, is backed by the clout of the £33 billion market cap Lloyds Banking Group. Barclays and HSBC are critical pieces of global financial infrastructure – every regulatory authority in the world has reason to keep a close eye on them. Lloyds is on the PRA’s list of Other Systemically Important Financial Institutions – the UK deems it critical to keep them out of deep trouble.
All are Systemically important financial institutions
| Globally Systemically Important Financial Institutions | Other Systemically Important Financial Institutions |
|---|---|
| HSBC Holdings Plc | Lloyds Banking Group |
| Barclays Plc |
All of these banks are much larger than even the largest Tier 1 broker platforms run out of the UK. Hargreaves Lansdown, the largest by assets under administration, was bought out in a private equity deal for £5.4 billion in 2024. This is a tiny fraction of the £129 billion market cap of the HSBC banking group.
Size, regulatory scrutiny, strong credit ratings and long histories are in no way a guarantee of stability or good management of a firm but do provide reasons to be more confident than we would be in their absence.
high company scores by virtue of their status
large, investment-grade rated banks
| Broker | Market Cap | Credit Rating | Year Established |
|---|---|---|---|
| Lloyds | 33.46bn | Fitch A | 1765 |
| HSBC | 129.84bn | Fitch AA- | 1865 |
| Barclays | 35.27bn | Fitch A+ | 1690 |
| Halifax | Part of Lloyds Group | Part of Lloyds Group | 1852 |
| iWeb | Part of Lloyds Group | Part of Lloyds Group | 2003 |
We’ve reviewed Lloyds Share Dealing, Barclays Smart Investor, iWeb, Halifax Share Dealing and HSBC Direct Invest to date. These platforms represent the best of what’s available in the UK when using banks as the anchor for your investment account. All come with high company scores of 4.5 by virtue of their status as significant national or global financial institutions. There’s nothing to differentiate them in this company stability dimension. Given this, to come out as a winner, they will need to shine in terms of their specific product offering.
2. fees
- Gold: halifax share dealing & Lloyds
- Silver: iWeb
- Bronze: HSBC
- Also Raced: barclays
Cost Simulation Assumptions (GIA accounts only)
| Model Feature | Assumption |
|---|---|
| Investor | UK |
| Instrument | UCITS ETF |
| Account | General |
| Initial Investment | £ 100,000 |
| Monthly | £ 1,000 |
| Time Horizon | 20 years |
| Gross Return | 8% |
⚠️ Our Methodology: The medal for this category is based on the GIA cost account simulation only. It assumes a 20-year accumulation period. We did it to make fees comparable for all providers. It is also part of our European cost comparison methodology. But, special mentions for the ISA and SIPP best offers are given in the Tax Consideration section at the end of the article.
Barclays, Halifax, Lloyds & HSBC offer a free regular investment service
Fees can be broken down into two main types. Platform fees and trading fees. Bank Brokers have a mixture of fee models. Some, like iWeb charge no platform fee at all, instead charging an account setup fee (though this is frequently waived) and dealing fees. Others charge a percentage fee, stepped for different amounts on the platform, like Barclays. FX, inactivity and interest on cash will also influence the overall cost of a broker.
Of the brokers we reviewed, Barclays, Halifax, Lloyds and HSBC all offer a free regular investment service. This helps clients both make and stick to an autopilot investing plan and stops the continuous drag of dealing fees eating into your returns. Iweb does not offer a regular investing service and revenue from trade fees is a substantial part of their business model.
barclays has to be avoided
| Broker | Stocks & Shares ISA | GIA | SIPP |
|---|---|---|---|
| Lloyds | £800 | £800 | 3,960 |
| HSBC | £2,959 | £2,959 | N/A |
| Barclays | £5,860 | £5,860 | £8,335 |
| Halifax | £720 | £720 | £3,600 |
| iWeb | £1,149 | £1,140 | £4,740¹ |
Lloyds group: A great offer
Halifax comes out well ahead other platforms on fees. £720 for ISA and GIA accounts is great value for money if you get on with the platform. The fact that the fees are lowest in category across the board on multiple account types is particularly impressive, as it simplifies the decision-making process, and you needn’t open accounts with multiple different brokers to secure a good deal across the board.
Close behind Halifax, Lloyds is a strong performer in terms of price. The ISA and GIA accounts are only marginally more expensive in comparison to Halifax at £800 for each other the time horizon of our calculator.
IWeb is a relatively cost-effective platform. It is a step up in costs from the best-in-class Halifax and Lloyds, but not so much as to rule it out if you like the platform for other reasons. Its SIPP was costly, potentially a result of it being outsourced to Tier 1 Broker AJBell, but it is not available anymore to new clients.
HSBC is not competitive, Barclays is incredibly expensive
HSBC Invest Direct is a pricey option at £2,959 for its ISA and GIA. This is well over double the next best rival at iWeb. Without any noticeable upgrade in features and only an ISA and GIA, this does not represent good value.
Barclays Smart Investor is by far the most expensive of the Bank broker platforms we reviewed. There is no reason why you should pay 700% more in fees than you would at Halifax. This represents very poor value and treatment of customers, and we do not think it is a smart choice. £8,335 in SIPP fees over the investment period in our model is mind bogglingly expensive and represents amongst the worst sort of cross selling of overpriced services by established big name firms.
Foreign Exchange Fees : A small piece of the fees puzzle.
FX fees will be a minor component of some investors’ costs annually if they hold stocks listed outside the UK. Bank brokers are quite expensive in this regard and none of those we reviewed offered rates below 1.00% on the first £5,000 converted. This underlines the need to keep things simple and preferably just hold funds or ETFs listed in GBP on these platforms. They’re not geared up for frequent international transactions and the costs of trading in and out will really stack up against your returns if you use these platforms for these strategies.
Fx Fees Summary
| Broker | FX¹ |
|---|---|
| Lloyds | 1% |
| HSBC | N/A |
| Barclays² | 1% |
| Halifax | 1.25% |
| iWeb | 1.50% |
²See above on Barclays fee structure and our Barclays review for further detail.
Cash Interest
While investment accounts, ISAs and SIPPs should not be mistaken for cash savings accounts, many investors will have cash reserves within the accounts, waiting for an investment decision. It’s reasonable to expect the broker to pass on a reasonable interest rate on this idle cash.
With the current Bank of England SONIA rate at 4.7%, all the brokers we’ve looked at are either substantially below this or offer no interest on cash at all. Some offer no interest at all, others only on cash in certain accounts. The bottom line is that you shouldn’t be parking your cash for any length on time.
cash interest Summary
| Broker | Cash Interest |
|---|---|
| Lloyds | 0% |
| HSBC | 0% |
| Barclays | 1.65% |
| Halifax¹ | 3.6% |
| iWeb¹ | 3.55% |
3. Platform
- Gold: halifax share dealing
- Silver: lLOYDS
- Bronze: iWeb
- Also Raced: hsbc & Barclays
Banker brokers aim to do one thing: Allow you to buy, sell and hold a range of listed securities on major stock exchanges worldwide. You will not find FX trading, cryptocurrencies, options, futures or other exotic derivatives on these platforms. You are not going to be lending out your shares for extra yield or gearing up your portfolio risk margin loans.
Whereas there is no significant difference in the tools and modernity of the interface, the Lloyds Group slightly outperforms in terms of simplicity and usability of their platforms.
Lloyds, Halifax and iWeb: Simple & Functional
Lloyds Share Dealing has a straightforward and easily navigable platform.You can buy and sell shares on UK exchanges as well internationally on NYSE, NASDAQ, Xetra and Euronext. Regular, automated investing is facilitated free of charge, ideal for the hands-off investor. 600+ ETFs are available as well as a solid set of funds, shares and individual government gilts and corporate bonds. Lloyds has an ETF shortlist based around the products offered by Blackrock. Since these products are competitively priced and largely sensible, this is not an issue, but you’ll want to check that you’re getting the best in any given category versus its competitors from other ETF issuers. Unless you also have a bank account with Lloyds you cannot use the mobile app, a downside some may find restrictive.
IWeb is a simple, buy and hold platform. It has simple tools for sorting through investments, a decent number of investment options (2900+) across funds, shares and ETFs. As well as the London Stock Exchange, you can trade on NYSE, NASDAQ, Xetra and Euronext. In all it is functional with everything required for sensible investing and nothing you do not. IWeb doesn’t stand out either for egregious problems or particularly impressive features.
Halifax Share Dealing. We found Halifax’s platform a little old school in presentation but it’s entirely functional and ideal for beginners. Unlike Lloyds you don’t need to open a bank account with Halifax to view your investment account on the Halifax mobile app. You can trade on UK exchanges as well as internationally on NYSE, NASDAQ, Xetra and Euronext. Regular, scheduled investing is available and free of charge, which is very useful.
HSBC: nice platform but pricy and more complicated
HSBC Invest Direct is the UK retail investing arm of the major global investment bank. With the Invest Direct account you get access to a good range of UK listed ETFs, shares and funds. With the Invest Direct Plus account you can trade in the USA on the Nasdaq and NYSE. The Plus account allows you to hold currency in dollars for your US trading. There is a regular investing service, but this doesn’t come with the price cut available at other bank brokers. Unless you have your bank account with HSBC, you cannot view your investments on their mobile app. If you have an HSBC current account, you can use it as the source of your funds for each trade and the destination for any cash generated by trades. Strangely this does not apply to the Plus account. This seems somewhat overly complicated.
Barclays: a standard option
Barclays Smart Investor: Barclays gives you a fairly standard set of investing tools. ETF availability is excellent at over 1000. They offer a good range of investment funds, stocks, bonds and gilts. Automated regular investing is free of charge, and you get access to 10+ stock exchanges globally.
Conclusion
🏆 Best UK Bank Broker: Lloyds (GOLD)
🥈 Silver: Halifax 🥉Bronze: iWeb
Bank broker podium
| BROKERS | COMPANY | FEES | PLATFORM | OVERALL |
|---|---|---|---|---|
| Lloyds | 4.5 | 3.0 | 3.8 | 3.8 |
| HSBC | 4.5 | 2.5 | 3.5 | 3.5 |
| Barclays | 4.5 | 1.0 | 3.7 | 3.0 |
| Halifax | 4.5 | 3.0 | 3.9 | 3.8 |
| iWeb | 4.5 | 3.0 | 3.8 | 3.8 |
- Gold Medal: Lloyds offers a simple and effective investment platform, backed by the stability of the Lloyds brand. It is cost-effective and provides all the basic functionalities that appeal to buy-and-hold investors. While its offering is very similar to the other two Lloyds Group platforms, the fact that it is the holding company and offers a directly managed SIPP gives Lloyds the edge to win the gold medal.
- Silver Medal: Halifax offers a very similar platform to Lloyds (slightly cheaper by a few cents) with a marginally more functional interface. It remains an excellent choice for investors seeking a safe, functional, and user-friendly platform for long-term investing. However, its foreign exchange (FX) fees make it slightly less competitive than Lloyds for investors interested in foreign currency products.
- Bronze Medal: iWeb ranks third, with a slightly more expensive offering, higher FX fees than Halifax, and the recent suspension of new SIPP accounts. Despite this, it still performs well compared to Barclays and HSBC, both of which appear too expensive and uncompetitive across all account types.
What matters most in bank category?
Fees (50%) and Platform (35%) have higher weight
We apply the following weights to our subscores:
- Company (15%) – The scale and systemically important nature of major banks means that we do not assign much weight to the safety of any given institution. They cannot differentiate themselves on this front as they all face the same regulatory standards, and we have taken their basic competence as implied. If Lloyds or Barclays went down, the safety of your ISA would be the least of your problems. In tandem with the FSCS, we think the baseline of confidence in these brokers should be high. This is not a guarantee.
- Fees (50%) – Investors using Bank Brokers are not ruthlessly pursuing the lowest possible fees, which might take them into the Tier 2 or Tier 3 space. But with the hundreds of thousands or even millions of GBP invested, expenses stack up. Bank brokers should not use their brand and credibility as a reason to offer overpriced services. We give fees a heavy weight in our analysis.
- Platform (35%) – Investors using Bank Brokers are unlikely to need or want complex portfolio construction and management tools. They do need an easily navigable platform with a good range of investment options and sensible features like regular automatic investing.
tax Consideration
Bets Offer: Lloyds
- Cheapest ISA: Halifax & Lloyds
- Cheapest SIPP: Halifax
Only three provide both an ISA and SIPP, Halifax has outsourced its SIPP product to Tier 1 broker house AJBell
Tax Wrapper summary
| Broker | Stocks & Shares ISA | SIPP | GIA | Lifetime ISA | Junior ISA | Junior SIPP |
|---|---|---|---|---|---|---|
| Lloyds | ✅ | ✅ | ✅ | ❌ | ❌ | ❌ |
| HSBC | ✅ | ❌ | ✅ | ❌ | ❌ | ❌ |
| Barclays | ✅ | ✅ | ✅ | ❌ | ❌ | ❌ |
| Halifax | ✅ | ✅ | ✅ | ❌ | ❌ | ❌ |
| iWeb | ✅ | ❌¹ | ✅ | ❌ | ❌ | ❌ |
As we saw in the first article in this series, tax efficiency really matters in the UK, because extremely tax efficient accounts are available. Not using a tax efficient account where it is available will massively damage your long term outcomes. Bank brokers do not offer you the full range of such accounts, which counts heavily against them in in our evaluation. Of the five bank brokers we’ve reviewed, three cover the basics of providing both an ISA and SIPP account for investing. Of these three, one have outsourced their SIPP product to Tier 1 broker house AJBell, thereby undermining the most attractive aspect of using a bank broker, namely familiarity of brand and the systemic importance of the institution as safety net.
iWeb had a SIPP offer also outsourced to Ajbell, however it is not available to new clients at this time. Legacy accounts maintains the previous conditions.
none of the bank brokers we’ve reviewed provide Junior SIPP or Junior Stocks and Shares ISA products
None of the bank brokers we’ve reviewed provide Junior SIPP or Junior Stocks and Shares ISA products. Parents investing for their children will need to look elsewhere.
those using bank brokers are likely to have children. family focused investment decisions simply do not get made.
Some investors may prefer to split their pension and ISA holdings across different providers, particularly if they have substantial holdings, to benefit from the £85,000 FSCS compensation cap per institution. But all else being equal, being unable to simplify your finances by holding all your own accounts and accounts for young family members on one platform is a negative. A good investment platform makes it easy to make good long-term decisions, a bad one makes them more complex. This is particularly frustrating as those using bank brokers are likely in the age bracket to have children of their own. Lack of provision may mean these family focused investment decisions simply do not get made.
All of the bank brokers we’ve reviewed provide annual summaries of account activity for tax reporting purposes
All of the bank brokers we’ve reviewed provide annual summaries of account activity for tax reporting purposes (this will be relevant to those claiming higher rate tax relief on pension contributions or using General Investment Accounts). These summaries purely for information purposes – all responsibility for accurately passing such information to the UK tax authorities falls on the customer.
What other broker categories are available in the UK?
Bank Brokers are strong options for safety conscious investors who want the closest thing to peace of mind possible. If that’s you, you’ll still need to be careful to choose a bank with competitive fees, as not all of them represent the best value for what are very similar services. If you need more advanced features and more tax efficient accounts – like a Junior ISA or Lifetime ISA, you’ll want to look at our article on Tier 1 Brokers. If you’ve a small portfolio and are seeking the lowest possible fees, check out our article on Tier 2 brokers. Click below to read more.
Good Luck and Keep’em* Rolling!
(* Wheels & Dividends)
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