Matthew Allen, director of London-based Mulberry Chartered, said Hargreaves Lansdown – which has claimed to be at the forefront of making pension transfers easier and quicker for investors – put up roadblocks when clients tried to move their retirement savings.
Mr Allen, who advises on and implements many pension transfers, said the issue of slow or delayed pension transfers only seemed an issue when dealing with clients of Hargreaves Lansdown.
He said: “When we request information on a scheme managed by them, we also request the relevant ‘discharge forms’. This is standard practice, and one we use with all other pension providers.”
“However, Hargreaves is telling us and other advisers it does not have discharge forms. This is not unusual – there are a number of providers that do not require them – but upon receiving a transfer request, they then write directly to the client warning them against transferring and enclosing discharge paperwork.
Mr Allen added: “They then refuse to process the transfer until the client completes and returns the discharge paperwork.”
He claimed this caused delays on what was already a “very long turnaround time”, and caused additional administration headaches, as well as the potential for additional expenses.
Mr Allen claimed this was his experience with two transfers he requested from Hargreaves Lansdown last month, with a third request made last week.
He said: “As you can imagine, it’s frustrating having to wait for Hargreaves to answer a request for information, then for the client to complete the relevant transfer documentation and send it, only for them to then write separately to the client with further forms, which added several weeks to the transfer process, and the client is paying them a fee for processing the transfer.
“I’m simply asking them to be transparent – declare exactly what authority they require from the client at the time its requested and then process the transfer in a timely manner – thereby giving them some justification for the additional fee they charge.”
A spokesman for Hargreaves Lansdown said the firm was at the forefront of making pension transfers easier and quicker for investors.
He added: “If the IFA makes the request, we send the communication to them. However, we cannot take action on a client’s investments or pensions without receiving their instruction.”
To transfer a self-invested personal pension away to another UK pension scheme, Hargreaves Lansdown charges £25 plus VAT to close the account (for a full transfer), plus £25 for a cash transfer.
If the client opts for an in specie (stock) transfer, a charge of £25 per line of stock replaces the cash charge.
Standard dealing charges apply to the sale of any investments.
Last week it was exclusively revealed on Financial Adviser’s sister website FTAdviser that Hargreaves Lansdown had decided not to revive its defined benefit (DB) pensions transfer operations, after temporarily closing the service last year.
When the firm put the service on hold in August 2015 in response to an inundation of transfer requests post-pension freedoms, it said it would accept “new cases again in a matter of days and weeks, rather than weeks or months.”
Ten months on, Hargreaves Lansdown’s head of communications, Danny Cox, confirmed that Hargreaves Lansdown had not revived the service, except in extreme cases when a client is in very poor health.
He said: “When a client asks us whether they should transfer out of a DB scheme, the trouble is, most of the time the answer is ‘no you shouldn’t’.”
Previously, the firm had refused to execute transfers for “insistent clients” – those who were advised not to transfer, but opted to anyway. However, Mr Cox said turning away clients on this basis was not good for the business, because it essentially meant clients were paying to be told to do nothing.
He added: “We simply say at the outset that we will only accept transfers in these special cases.”
Despite this policy, he said the firm had still seen a “big increase” in transfer requests since pension freedoms came into force in April 2015.
Back in March, the Association of British Insurers (ABI) came under fire from advisers gathered at FTAdviser’s Retirement Freedoms Forum for failing to take action against members who were trapping savers in poor-performing pension funds.
Yvonne Braun, director of long-term savings at the ABI, said: “It is not the Wild West.” She recommended that advisers whose clients faced unacceptable exit charges flag this with the Financial Conduct Authority.
peter.walker@ft.com
