Hargreaves Lansdown backs down over controversial new charge

Hargreaves Lansdown, Britain's biggest investment shop, has scrapped plans to increase charges for savers that prefer to buy investment trusts over unit trusts or other "open-ended" funds.

The firm, founded by billionaires Peter Hagreaves and Stephen Lansdown (pictured), ushered in a number of new fees when it unveiled its new charging structure last month.

One of the new fees introduced was to change the way it charges customers who hold investment trusts.

Before any changes were announced, these funds, which are quoted on the stock market, were treated the same as holdings of any companies' shares. But then the broker said from March the two types of investment would be charged for separately.

It was proposed that investors would pay up to £45 a year to hold company shares and the same to hold shares in investment trusts, whereas previously they paid up to £45 to hold both. In other words, for some investors the charges would have doubled to £90 a year. This was the proposed cap for Isa accounts and ordinary fund and share accounts.

But the maximum charge for self-invested pension accounts (Sipps) was much higher at £200 a year again for each type of holding, meaning some large investors would have paid £400.

But today the firm announced, alongside its half yearly results, that the proposed new charge for investment trusts will be scrapped. The broker said its plan had proved unpopular with a number of its customers.

Instead under the new pricing, which comes into effect in March, there will again be a single charge for investment trusts and shares of 0.45pc for Isa savers, which is capped at £45 per year. Therefore investors that want to hold both will avoid the potential double charge.

Ian Gorham, chief executive of Hargreaves Lansdown, said the new fee has been scrapped in response to client feedback.

“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,” said Mr Gorham.

“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.”

Separately the firm announced its half year results which saw assets under management rise 43pc in the last year to £43bn.

The firm said it has increased its customer numbers by 77,000 over the past six months to 584,000.

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