All current and future customers invested directly in M&G ISAs and funds will be eligible for the new service, which is due to be launched later this summer, the company said.

In a statement, it said: “The ongoing charge figure (OCF) for a typical M&G equity fund, such as the M&G Dividend Fund, will fall to 1.16% for all direct customers with at least £5,000 in their portfolios. The OCF of a typical M&G bond fund, such as the M&G Corporate Bond Fund, will fall to 0.91%. As an example, a direct investor with £2,500 in each of these two funds, who chooses to move to the new online service, will see the total annual charges he or she pays fall by £18.75.

“In addition, while the transaction costs of M&G’s retail equity funds, which cover dealing and external research, are already among the lowest in the industry, M&G will stop charging all investors for external research altogether from 1 January 2017. There will be no increase to the ongoing charge figure as a result of these changes; M&G will pay the costs of external equity research itself.”

Michael McLintock, chief executive, M&G Investments, said: "The lower fund charges available through our new online service will help our customers' savings work as hard as possible, whether that's to provide an income in retirement today, or grow capital for the future."

Jonathan Willcocks, global head of retail sales, M&G Investments, said: “Lower transaction costs are great news for all our investors and I’m delighted that we’re also offering our direct customers a more modern, round the clock, execution-only service.

“For the majority of our end investors, who do not invest with us direct, we’re focused on supporting the excellent service provided to them by financial advisers and other distribution partners up and down the country – relationships which are hugely valued by all of us at M&G.”