PlatformsFeb 5 2014

Hargreaves U-turns on investment trust top-up fees

twitter-iconfacebook-iconlinkedin-iconmail-iconprint-icon
Search supported by

Hargreaves Lansdown has backpedalled on its decision to charge clients for investment trusts following heavy criticism and amid fierce pricing competition from rival non-advised platform providers.

When it revealed its Retail Distribution Review pricing structure earlier this year, Hargreaves revealed it was introducing top-up charges for investors who hold investment trusts of £45 for Isa and Fund & Share Account savers and £200 for self-invested personal pension investors.

Soon after Hargreaves made its pricing announcement, competitor Fidelity revealed it would charge lower administration fees on its own direct-to-consumer platform and slightly cheaper average negotiated fund charges.

Barclays Stockbrokers and Bestinvest both followed by announcing competitive pricing structures.

In a statement published this morning (5 February), the company said: “Investment trusts were one of the most challenging considerations [of the new structure]. Investment trusts are covered by the new regulations, they are traded on the stock market like shares but clients tend to hold them and treat them like funds.

“Therefore, we decided to amend the annual charge for holding investment trusts in Vantage so that they would be charged separately from shares.”

From 1 March 2014, clients will pay no charge for holding any shares, investment trusts, bonds, VCTs, gilts or ETFs in the Vantage Fund and Share Account, as is currently the case.

In the Vantage ISA, there will be a single annual charge covering all these investments of 0.45 per cent capped at £45 per year. In the Vantage Sipp, there will be a single annual charge of 0.45 per cent capped at £200 per year. Investment trusts will not be charged separately as previously proposed.

The company added that some clients will pay less due to the reduction in the percentage charge applied to the Isa and Sipp from 0.5 per cent to 0.45 per cent.

Hargreaves chief executive Ian Gorham said: “It is clear that this particular aspect of our pricing change has been disliked. I believe it is therefore the right thing to do to revert to a charging structure that clients are happy with.

“Clients who hold investment trusts through HL will therefore be better off than previously proposed.”

In its half-yearly report published today, HL revealed it now hold more than £43bn in assets under management, up £13bn year-on-year.

It also claims to have taken on 77,000 new clients, which Mr Gorham said is “easily the most for any six months in our history”.

Revenue for the company was 13 per cent year-on-year to £158.4m, with profit before tax up 11 per cent to £104.1m.