Hargreaves Lansdown changes its mind about making clients pay a separate fee for holding investment trusts.

5th February 2014


Hargreaves Lansdown has dropped plans to charge clients separately for their investment trust holdings. The trust move has proved to be the most controversial aspect of its repricing plans with investor message boards full of complaints.

The firm had plans to charge trusts separately from its shares service despite the fact that investment trusts are listed as shares.  Now the firm has decided not to go ahead with the change.

In a note issued this morning discussing the pricing change, it said: “Investment trusts were one of the most challenging considerations. 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. This would also support extending our services around investment trusts”.

Ian Gorham, Chief Executive, Hargreaves Lansdown (pictured) says: “We have always listened to clients and designed our service around what they want.  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 Hargreaves Lansdown will therefore be better off than previously proposed.”

The note continues: “For the avoidance of doubt, this means that from 1 March 2014, as they do today, clients will pay no charge for holding any shares, investment trusts, bonds, VCTs, gilts or ETFs in the Vantage Fund & Share Account.  In the Vantage ISA, there will be a single annual charge covering all these investments of 0.45% capped at £45 per year.

“In the Vantage SIPP, there will be a single annual charge of 0.45% capped at £200 per year.  Investment trusts will not be charged separately as previously proposed and in fact many clients will pay less due to the reduction in the percentage charge that we are applying to the ISA and the SIPP from 0.5% per year to 0.45% per year (with caps). In addition, the annual loyalty bonus of 0.5% per year for the Fidelity China Special Situations investment trust will still be introduced on 1 March 2014. All the other changes explained in our letter of 15 January will remain the same.

Gorham adds: “I would like to thank all those clients who took the time to write in or contact the help desk with their views.  At Hargreaves Lansdown we do care greatly about all our clients, and listen carefully to all our client feedback. We are committed to Hargreaves Lansdown being the best place to buy any investment including investment trusts. I hold some myself.  These new improvements will further enhance our investment trust service.”

One industry expert Mark Polson, principal at platform consultancy the Lang Cat has welcomed the decision, though he says other potentially unpopular price changes remains.

“Hargreaves Lansdown have obviously listened and acted quickly to reverse their decision. Fair play to them. However, before we get too misty eyed, there are still 2 key issues that need sorted. Those are exit fees and the rather silly discount model which is based on assets held per account rather than overall assets held. If they can reverse those decisions too then they really will have demonstrated they have listened to their customers and are acting in their best interests,” he says.

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