Market view: Hargreaves’ charges aren’t clear enough

New pricing structures revealed this morning by Hargreaves Lansdown and set to come into effect on 1 March are still not transparent enough, commentators have argued.

Earlier today (15 January), Hargreaves claimed it had negotiated a discount of 0.11 per cent for funds on its Wealth 150 list, with the average annual management charge for these funds falling to 0.65 per cent.

The execution-only platform provider added that 27 funds on a special Wealth 150+ list will carry an AMC of approximately 0.54 per cent.

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Ian Williams, managing director of Cavendish Online, a web-based discount broker of financial services, pointed out that customers may still not know how much they are paying for extras such as HL’s regular Investment Times magazine.

He said: “There’s nothing wrong with offering additional benefits and charging more for them as long as customers are clear that they are paying for those services in the form of higher charges.

“According to our own research 68 per cent of customers would prefer to pay the lowest charges to an investment platform and then only pay extra for the services they wanted or used.

“Just 6 per cent said they’d be happy to pay higher charges in return for a regular magazine about funds and investing.”

Meanwhile Gina Miller, founder of the True and Fair Campaign for more transparent charging standards, claimed HL’s new pricing “still does not give consumers total transparency or greater understanding on all costs and fees”.

Ms Miller said: “[The Retail Distribution Review] has so far failed to deliver clarity for consumers on the amount they are paying for investments, today’s announcement from Hargreaves Lansdown demonstrates the scale of the problem.

“Its claim that the pricing changes will see customers saving money over-all because of discounts obtained from fund providers risks causing more confusion, not giving greater clarity.”

She added that unless fund managers reveal all costs and fees including transaction fees “in pounds and pence”, and a single-figure showing total cost of investing which includes all intermediary levels in the investment chain, clients will not be in a position to compare and choose the best place for their money.

“Savers are still no closer to gaining this information, from Hargreaves Lansdown or most fund platforms and fund managers.”