Hargreaves Lansdown worried about Woodford for 18 months

It was included in the revised Wealth 50 list in January 2019, while funds such as Jupiter European, and Fundsmith Equity, which were top performers in their respective sectors, were not on the list.

Hargreaves Lansdown clients pay an annual management fee of 0.5 per cent for investing in the fund, which is cheaper than the 0.75 per cent paid by most other clients.

This makes owning the fund cheaper on the Hargreaves Lansdown platform, despite the platform charge of 0.45 per cent being more expensive than some others.  

This discount comes as Hargreaves clients are able to buy a Z share class of the fund, which is cheaper than the other share classes.

In order for a platform to be able to offer this share class to its clients, it must be confident its clients can place £500m into the fund, which is a hurdle few other platforms could meet, and so most others could only offer the Woodford Equity Income fund at full price.   

Mr Hill said the links between his firm and Woodford Investment Management have not been detrimental to clients, and that he believes the fund was on the buylist for reasons not solely related to the cheaper fee.

There have been calls for best buy lists to be investigated and regulated although such lists do not constitute financial advice.

But Mr Hill wrote to Ms Morgan: "In order for best buy lists to help savers make investment decisions, it is crucial that they are rigorously and fairly constructed, that this process is backed up by appropriate oversight and governance, and that there is no commercial conflict of interest between the ‘best buy’ list / model portfolio provider and their clients.

"In terms of fee income, Hargreaves Lansdown is paid directly by our clients, not by the fund managers.

"Our fee income is calculated as a percentage of the clients’ assets held on our platform, and we earn the same fee regardless of the funds our clients hold.

"If they select a good fund manager and their assets grow more quickly, we end up earning more; this means our interests are aligned with our clients."

He said Hargreaves Lansdown uses the combined buying power of its 1m plus clients to get the lowest cost it can for each fund, meaning all other things being equal, this delivers better investment returns for its clients.

The average reduction to the standard annual management charge negotiated by Hargreaves Lansdown for actively managed funds on the Wealth 50 list is 30 per cent, he said.

He added: "In 2018, our clients saved over £61m on their fund management costs as a result of the terms negotiated on their behalf."