Hargreaves Lansdown to scrap controversial exit fees
Hargreaves Lansdown will no longer charge admin fees when a customer sells stocks or funds, or moves money elsewhere.
Hargreaves Lansdown has been under pressure regarding fees following its involvement in the Neil Woodford debacle. In June it agreed to waive its platform fee on the Woodford Equity Income fund while trading in the fund is suspended.
Hargreaves Lansdown clients had been major supporters of the Woodford funds: according to the most recent set of accounts, Hargreaves Lansdown holds 31 per cent of the Equity Income fund at 31 December 2018 and 62 per cent of the Income Focus fund.
Danny Cox, spokesperson for Hargreaves Lansdown, said: “Putting the client first is always our priority and cutting our fees is an important step as we seek to improve our service year on year. Our new tariff is simple, transparent and great value for money.
“From now on, online clients will simply pay a platform service fee, and for their share deals, and nothing else. Last year, we cut our overseas dealing charges and negotiated an extra £7m worth of savings on fund charges for our clients. Now, we’ve removed all of our other incidental administration charges.
Cox confirmed Hargreaves Lansdown had removed exit fees and called upon other players in the industry to do the same. He said the firm had invested heavily in electronic transfers, which can be completed more quickly and cheaply than manual paper-based transfers. About 60 per cent of transfers to Hargreaves Lansdown can now be done electronically, up from around 30 per cent a year ago.
“We continue to support a ban on all exit fees, provided this is industry wide and not just confined to platforms, which would distort the market,” added Cox.
The Hargreaves Lansdown fees that have been reduced to zero include:
- Internal stock transfer fee (previously £12.50 per holding)
- Government actuarial department calculation fee on pensions (previously £75 plus VAT)
- Fee to transfer a nominee shareholdings to a certificate (previously £25 per holding)
- Transfer fees (previously £25 per holding or for cash)
- Account closure fee (previously £25)
- Early account closure fee on a pension (previously £295)
- Charge to reinvest fund income (previously 1 per cent of the trade value with a minimum of £1, and maximum of £10)
- Charge to sell funds to pay outstanding fees (previously £1.50 per fund).
Rival investment platform Interactive Investor welcomed the news that Hargreaves Lansdown is to scrap exit fees.
Richard Wilson, chief executive of Interactive Investor says: “This is a very welcome move for investors. We have long argued that exit fees are a recipe for rip offs and a barrier to competition. Now a much more competitive market place can start to open up.
“This move throws down the gauntlet to the wider industry, which has dragged its heels on this issue. As we await the regulator’s final decision on exit fees, let’s see if other major platforms can call time on exit fees without further arm twisting. What we would like to see is an outright ban on exit fees for existing customers, not just new business going forward. It is the only right thing to do.”
Interactive Investor announced that it was permanently removing exit fees in November 2018 and has not charged exit fees since December 2017.