Hargreaves Lansdown exit fees

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Flatliner27
Flatliner27 Posts: 10 Forumite
in Savings & investments
Hi everyone,

Last year I opened my first S&S ISA with Hargreaves Lansdown, poopooing the high fees just looking to get started having never invested in equities or bonds before.

I was looking for a set-and-forget so went for the Portfolio+ option and made regular £500 top-ups, but now I'm considering switching over to the VLS100 (I'm in it for the long term) due to the considerably lower fees, particularly as my investment grows.

Looking at Hargreaves' website, I'm wondering how I can play this one to keep the exit fees at a minimum. Here's the relevant part:

Administration Fees
Cash withdrawals
No charge
Account closure fee
£25 + VAT
Automated sales to cover charges
(selling fund units or shares to cover fees)
£1.50 per stock per month Six-month statement and valuation (paperless)
No charge
Six-month statement and valuation (paper)
£10 + VAT per statement and valuation

Transfers
Transfer out (as cash)
£25
Transfer out (as stock)
£25 per holding
Internal stock transfer between accounts
£12.50 per stock


I think the obvious option is to close the account (pay £25+VAT) and transfer out (pay additional flat £25) but why would you do that?...

Would it not be the cheapest option to sell up and transfer out as much cash as possible without closing the account? Presumably that'll be £0 cost (green text)

Are there any implications to leaving the ISA open (opened FY17) with just £1 in it? Thus avoiding the account closure fee, and no fee for transferring out as you're just cashing in shares and removing the funds from the account.

It seems all too easy to me, what am I missing?

Thanks,

Comments

  • bowlhead99
    bowlhead99 Posts: 12,295 Forumite
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    edited 22 March 2018 at 1:00PM
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    You are right that the cheapest way of getting cash out of your account is just to sell your investments and withdraw it rather than ask for it to be transferred to another ISA manager. In doing that you would lose ISA status on the money. However if you have plenty of capacity in your 2018/19 £20k ISA subscription allowance you could just contribute it as a fresh subscription to Vanguard (paying 0.15% for the ongoing platform fee instead of 0.45%).

    Alternatively if you go through the formal process of transferring to Vanguard you preserve the unused ISA capacity, but HL will withhold their fees when sending the cash over.

    You might find that when you request to withdraw 'all but £1' - which you could say you want to do for some legitimate purpose while still intending to make further contributions before the end of this tax year - they will warn you that you need to pay a closure fee if you are going to abandon the account and not make further subscriptions. Or prohibit you from doing it, to ensure you keep £30 back to pay the potential closure fee.

    If you just leave a few pounds in there and walk away, there will likely be small print in the T&C which allows them to close low value accounts and take fees out before returning you the residue (if any).

    If you did manage to get your balance with them down to a few pounds and then walk away, and they wanted to exercise their right to be paid a £30 closure fee, they will have a hard time doing it if you have less than £30 in the account. It's unlikely they will send the debt collectors round for your unpaid exit fee bill, because of the cost of doing so. However, they probably could, if you agreed you'd pay those fees within the account terms.
  • ColdIron
    ColdIron Posts: 9,049 Forumite
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    It might be worth reading section A33 - termination and closure in the T&Cs

    Where an Account belonging to you has a valuation of less than £250 and has been inactive for two years or more we reserve the right to close the Account and send you the balance, less the Account closure fee and any other charges that are due.

    If you reduce or give the instruction to reduce the level of cash or stock in your Account to a value below £50, we reserve the right to close your Account and send you the balance of the Account less the Account closure fee. Any Loyalty Bonus will be paid in cash following Account closure.
  • TCA
    TCA Posts: 1,530 Forumite
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    I don't what Portfolio Plus is but I presume that you can't or don't want to just sell the existing funds you're investing in and buy VLS100.

    Assuming that you want to move to a platform with less charges, you should check out whether there's a minimum amount that needs to be left in the H&L ISA. I know their trading account requires at least £50 worth of stock or £50 cash and failing that they'll close the account automatically and charge you the closure fee.

    There are no implications of leaving an ISA with a minimal amount in it but bear in mind if you withdraw cash from your ISA then you lose that part of the tax-free allowance and you can only contribute to one S&S ISA per tax year anyway.
  • Flatliner27
    Flatliner27 Posts: 10 Forumite
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    Thanks everyone, looks like I'm paying the fee! Thank you for spotting that ColdIron.

    I'll transfer the ISA to VLS100 and pay the fee when I'm ready then.

    Cheers
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