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Hargreaves threatens IFA with legal action over charges criticism

Hargreaves Lansdown has threatened Philip J Milton & Company with legal action after it criticised Hargreaves’ pricing structure in a client newsletter.

In a newsletter sent to around 3,500 clients at the end of January before Hargreaves changed its proposed charging model for investment trusts, managing director Philip Milton said clients will start “deserting” Hargreaves following its pricing structure announcement last month.

He said: “When customers start to realise they have to pay (as opposed to having charges deducted unseen as back-handers as in the past) they will start deserting.”

Milton said Hargreaves would be doubling its charges for clients holding investment trusts, and that clients should be aware of additional charges.

In an email sent to Milton last week, seen by Money Marketing, Hargreaves head of financial planning Danny Cox said: “There are a number of factual inaccuracies and misleading statements which would be of great interest to our lawyers if we chose to engage them.

“One of the biggest problems in financial services is endless knocking copy.”

He said it is untrue to say Hargreaves is doubling its charges for investment trusts and took issue with claims its Wealth 150 funds list was based on anything other than performance.

Hargreaves U-turned last week on its decision to apply additional charges on investment trusts. It had planned to levy an extra 0.45 per cent on holdings in investment trusts, capped at £45. It already charges 0.45 per cent on equity holdings.

Cox declined to comment further.

Milton says: “It is wrong to say I was incorrect on investment trust charges when it was correct at the time of writing. These threats are an overreaction.”


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There are 9 comments at the moment, we would love to hear your opinion too.

  1. My compliance advisers have always maintained that the regulators will not accept “execution only” pension’s switches on the basis that a layperson could not possibly have the necessary level of understanding in order to issue such an instruction. How then is it possible for HL to conduct “execution only” pension switching into their SIPP? Is this a regulatory double standard evidencing a bias against “coal face” advisers?

    Answers on a postcard.

  2. I admire HL as a company especially for there PR skills but legal action against an IFA over this? Makes they sound a little desperate and could easily backfire.

  3. They do have an advisory arm so could get round it that way. To accept an execution only transfer you must be authorised to accept pension transfer business and have a transfer specialist. Execution only sales must be genuine and if you were not authorised to accept occupational pension transfers then you couldn’t do it. Hargreaves Lansdown Advisory Services Limited does have the necessary permissions and they should really redirect customers for advice in these circumstances.

  4. The sooner advisers get away from product selling the better. We all need to sell and give advice and then we will recommend the most appropriate product to meet that clients needs. Then we will not have to be bothered about getting into these discussions.

  5. correlationstreet 14th February 2014 at 12:47 pm

    The best thing would have been to have said nothing about this – now it is all over the press and will run & run, HL will be accused of bullying the small guy and all those people out there who can’t wait to have a pop at them will be delighted. There are forces far bigger at work that will determine whether clients leave HL, that is for sure.

  6. @Anthony Smith | 14 February 2014 12:15 pm

    Anthony, these switches are not advised. HL include a small “execution only” statement is their application. In addition their mailshot contains numerous encouragements to transfer everything bar the kitchen sink into their HL Advantage SIPP.

  7. “One of the biggest problems in financial services is endless knocking copy.”

    people in glasshouses??

  8. To put into print and then distribute any negative comments/opinions/predictions against a company such as HL strikes me as very foolhardy.

    And so what, Simon, if the regulator doesn’t seem to be bothered about HL encouraging non-advised transfers of assets into their Vantage SIPP? Personally, I’ve more pressing matters on my desk about which to worry.

  9. In relation to the article one defence to liable is “fair comment”. It is indeed unwise to make an inaccurate comment if inaccurate it is.

    With regard to Julian’s comments HL have won their place based on reduced costs through non advised transactions. It is therefore reasonable to raise the question of regulatory duplicity after all I’m sure most IFA’s would like to set up an execution only website, directing potential SIPP and Pension switch clients and thereafter bypassing hours of expensive critical yield calculations.

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