Hargreaves Lansdown performs u-turn on charges

5 February 2014

The UK’s largest Isa platform, Hargreaves Lansdown, has performed a U-turn on plans to introduce a charge to investors who wish to hold investment trusts.

The firm announced its new pricing structure in mid-January, introducing a raft of new charges including a controversial 0.45% fee for holding investment trusts within the Vantage platform - capped at £45 a year.

The changes imposed by Hargreaves and rivals are the result of the Retail Distribution Review, which is banning the payment of commission on the sale of funds to make it easier for investors to compare fees. As a result investment platforms have been in the process of restructuring their charges. Most now charge an account or platform fee and either rebate commission via the retail shares, or sell so-called 'clean shares', which have a lower AMC that does not include the payment of commission.

Waive fees

The new investment trust charge in particular was not well received by Hargreaves customers, while rivals were quick to seize an opportunity to waive investment trust fees when they announced their new charges.

With that in mind, Hargreaves has clearly decided that to scrap its plan to impose the fees on customers. In a statement, it said: "We deliberated long and hard about the changes required to accommodate the new regulations. 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 of Hargreaves Lansdown, added: "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."

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