A platform fee is the charge an investment platform makes for holding and administering investments such as ISAs, pensions and funds. It is separate from the charges of the funds themselves and pays for the service that houses them.
In one line: A platform fee is what an investment platform charges to hold and administer an investor's accounts and funds.
How a platform fee works
Platform fees are levied by FCA-regulated investment platforms. They are commonly a percentage of the holding, sometimes capped, or a flat annual charge, and sit on top of fund charges and any dealing fees.
For example, a 50,000 GBP portfolio on a platform charging 0.25% a year pays 125 GBP in platform fees annually, before the funds' own ongoing charges are added.
Percentage fees suit smaller pots while flat fees can be cheaper for larger ones, so the structure matters as a portfolio grows.
Platform fee vs the ongoing charges figure
A platform fee pays the platform for custody and admin across whatever funds are held. The ongoing charges figure is charged by each individual fund for running that fund.
Both reduce returns, so total cost is the platform fee plus the fund charges plus any dealing or transfer fees.
Primary source: FCA: Investments