Warning for people using Hargreaves Lansdown

newDude

le_loup wrote: »

I haven't seen one, but the managers documentation would show it.

If HL were upfront and honest, and had a clearly available list on their web site, wouldn't that shoot "spurious claim which costs the claimant zero" dead in the water?

utigers

Which fund is it then?

Uncertain

le_loup wrote: »

It's like any other spurious claim which costs the claimant zero; it encourages chancers. Or perhaps you agree with our compensation culture. That's your choice, it wouldn't be mine.

Based on what is posted here I don't see it is "spurious".

As for encourages chancers, well if there wasn't this kind of protection for the consumer the big institutions would get away with almost everything as few would be able to take them on.

I don't actually think it is particularly fair that the company is charged a fee by the FOS if they are found to be in the right. A fairer system would be more significant penalty to be applied if they are in the wrong with a percentage going to the aggrieved customer.

le_loup

Uncertain wrote: »

Well it will cost the OP nothing to raise a complaint and it will cost HL £500 if the FOS take it on so they may well settle "as a gesture of goodwill".

Uncertain wrote: »

I don't actually think it is particularly fair that the company is charged a fee by the FOS if they are found to be in the right.

Are those two comments compatible? If they are, I don't see it.

If the guy has a real complaint, of course he should take it to the FOS but you are implying that he should threaten in order to get a payment so that H-L avoid a £500 charge right or wrong.

I happen to believe that the industry is riddled with unreasonable charges - soft closes being one of them. If they want to close the fund to newcomers, then close the bl00dy thing. However, part of the reason for charges being what they are, are chancers taking a up no fee offers that the rest of us pay for.

Rant over, if I got you wrong, I apologise.

Uncertain

le_loup wrote: »

Rant over, if I got you wrong, I apologise.

You did! Accepted!

Ark_Welder

Does this thread not point to

1) People don't read fund prospectus or reports adequately enough before investing

2) People that do read the reports, etc., don't subsequently keep up-to-date with their information

3) If there was a list of soft-closed funds, would it be consulted before an investment was made?

le_loup

Uncertain wrote: »

You did! Accepted!

How entirely gracious of you.

cepheus

dllive wrote: »

Has anyone else had experience of this?

Yes, this one evidently according to Dunstonh

AXA Framlington Managed Income Fund Accumulation Units

Sell : 598.00p | Buy : 636.20p | down 0.50p
Prices as at 07-11-2011

Initial charge 5.25%
Initial saving 5.25%
Net initial charge0.00%
Annual charge1.00%
Annual saving0.150% ²
Performance chargesNo
Total Expense Ratio1.11%
Launch date27-02-1981
Launch price£0.50
SectorGBP
Strategic BondFund sizeN/a
Number of holdings89
Fund typeUnit Trust
Type of unitsAccumulation

HL never mentioned soft closure to me through, they gave a different explanation, see here.

https://forums.moneysavingexpert.com/discussion/3594739

But why are they still showing the initial saving if it is soft closed?

dunstonh

cepheus, I don't think that one is soft closed anymore. It was but it re-opened.

I am confused on that one as the spread published is where you would expect it to be for the initial charge. With the discount applied to the initial charge it should almost wipe it out. I haven't looked at it in enough depth to give you a comprehensive answer (time hasnt allowed). Plus, the spread HL were indicating was bigger than the maximum allowed on that fund (if you take the discount off and add the spread you got then its way above the maximum. So, does that mean there was no discount?)

cepheus

dunstonh wrote: »

cepheus, I don't think that one is soft closed anymore. It was but it re-opened.

I am confused on that one as the spread published is where you would expect it to be for the initial charge. With the discount applied to the initial charge it should almost wipe it out. I haven't looked at it in enough depth to give you a comprehensive answer (time hasnt allowed). Plus, the spread HL were indicating was bigger than the maximum allowed on that fund (if you take the discount off and add the spread you got then its way above the maximum. So, does that mean there was no discount?)

According to my calculations the price I paid (620.59 on the 14th October) was effectively the full spread without the discount, which looks very suspicious. Does the explanation Framlington or HL gave make any sense to you?

Usually the offer price is calculated by adding the initial charge to the creation price. As the creation price is the lowest price to buy units, the maximum discount that can be applied is the full initial charge. This is known as a valuation on an offer basis. The normal initial charge on this fund is 5.25% and we are able to discount the initial charge by 5.25% so the units would just be purchased at the creation price.

However, the other way that the Unit Trust Manager can calculate the bid and offer prices is known as a valuation on a bid basis. Trusts will be usually valued on a bid basis when a higher proportion of units are being sold than bought. The manager is effectively sliding the bid/offer spread downwards towards the bottom of the permitted range. The creation price does not move with the bid and offer prices, and as a result the gap between the offer and creation prices will narrow. This is the way the units were valued for your purchase on the 14th October.

Typically when a fund is being valued on an ‘offer basis’, the creation price is around 1 or 2% higher than the bid price. However, when a fund is being valued on a bid basis, as in your situation, the fund manager slides the creation price much closer to the offer price which happened in this case.

Neither can I see wild movements in markets on October 14th either, it all looks quite normal for the last few months at least!