H-L introduces a Tracker Platform Charge

Ilya_Ilyich

Welp, looks like I'll be moving to Alliance Trust and using a Vanguard LifeStrategy™ fund. Maybe not the precise asset split I'm after but hey -- free rebalancing, easy-to-meet minimums and £48pa is going to be cheaper than the alternatives I can find.

Debbie_A_3

Thanks for warning me about this! Co-incidently the latest edition of "Investment Times" appeared on my doorstep this morning. The new charges are spelled out very clearly on page 17: £2 for each HSBC tracker (note that these fees do not count towards the annual cap on the 0.5% fee applied to shares and ETFs).

In some ways I am glad that they have done this. I have been *thinking* about moving away from HL for some time. I know that they are far from being the cheapest but I needed something to give me the final push. This will do it. I don't have a huge proportion of my portfolio in trackers, but I use several of them and it would only be a matter of time before £2/month becomes £2.50 or ....

HL have been good to me. I moved a £20k portfolio to them about 10 years ago and I was astonished that I no longer had to pay the 5% inital Unit Trust fees and I got some of the trail commission back. But now that my portfolio has grown into six figures, I need somewhere a bit cheaper.

So .... where do folks suggest I move my money to? It is split between an ISA and a SIPP and it comprises 80% actively managed funds and 20% HSBC trackers?

Thanks
Debbie

Doshwaster

I received my the latest edition of HL's Investment Times in the post this morning and it has an article about these new charges.

I have a couple of thousand in two HSBC trackers so this is a significant increase in costs for me.

masonic

SnowMan wrote: »

Hugely disappointing news

We can expect to get notification soon as they have to give 30 days notice (don't think just sneaking it into the factsheets counts as notice in my view). This is what their terms and conditions say

There is an article about this in this months investment times. The new charges come into effect 31st December.

SnowMan

masonic wrote: »

There is an article about this in this months investment times. The new charges come into effect 31st December.

Thanks

The Investment Times (article is on page 17) has literally just arrived on my doorstep as I was reading your post :rotfl:

I've got money in the HSBC FTSE all share index and HSBC FTSE 250 index trackers.

The article says that they are going to write to SOME people with money in the funds where the platform charge is being introduced that don't currently pay the additional 0.5% platform charge on that fund. However seems to be saying they won't be writing to me as the 2 funds above are listed in the table on page 17.

So if we they don't write to me it is not obvious to me how they are going to take the charge given that all of my funds are in accumulation units and there is nothing in my cash account.

Will they separately bill me for £4pm?

Only alternative would seem to be for them to sell units in my fund (without my permission) to cover the charge, or take it out of the sale proceeds when I sell investments.

Looks on reading the terms that they might try to use term A19 if they can't get you to pay their platform fee in this circumstance.

Probably will be moving away so may be a pretty academic point in my case.

saveonarola

It'll be interesting to see what iii does now. As the last broker to offer those HSBC trackers at cost, with no platform, wrapper or dealing fees, they stand to gain a lot of business. But if it's loss-making business, as dunstonh says, then they might not want it!

I suppose, if HL can't afford to do it, then iii might well follow suit. Presumably they've got some RDR-related plans of their own, anyway.

Totton

Before rushing in to move away from HL it might be better to wait awhile and see what other service providers offer once the effect of these transparency changes are delivered. You also need to work out the effect of the monthly fee, obviously a £1,000 holding will be 'costlier' than a £10,000 holding but you have to consider how many affected funds you hold and do some maths against those charges and what you would pay for an active fund or IT, ETF etc held with HL.

I'd also consider whether you think HL deliver a service worth paying for, will the chosen alternative not also ramp up their charges in the near future etc.

Personally I'm staying with HL, I don't think they are wrong to want holders of trackers to pay their way but I would have preferred to see a fee similar to the IT fee of 0.5% to a annual maximum of £45 or thereabouts, that would be fairer imho.

Of course tracker holders are always free to go direct and pay no initial fee, seems an easy option to me.

http://www.legalandgeneral.com/investments/choose-a-fund/index-tracker-funds/

Regards,
Mickey

masonic

SnowMan wrote: »

So if we they don't write to me it is not obvious to me how they are going to take the charge given that all of my funds are in accumulation units and there is nothing in my cash account.

Will they separately bill me for £4pm?

Only alternative would seem to be for them to sell units in my fund (without my permission) to cover the charge, or take it out of the sale proceeds when I sell investments.

Looks on reading the terms that they might try to use term A19 if they can't get you to pay their platform fee in this circumstance.

Probably will be moving away so may be a pretty academic point in my case.

It isn't clear, but by the way the charge is set out in their Performance & Discount Tables it looks as though they plan to apply it to clients' loyalty bonus account. For me, and anyone else who holds both managed and passive funds, the charge will probably be paid for by loyalty bonuses. If you don't get enough income from the loyalty bonus to cover the platform charge, then I suspect they would write to you and try to arrange to collect the fees by direct debit as they accrue. Trying to settle the debt using term A19 would be too much hassle and very unfair on the customer.

SnowMan

Worth saying that my reading of their terms and conditions is that the £2pm charge will go up again shortly. The term they use is to say the platform charge will be 'periodically reviewed' for example see section B3 on page 60.

Personally as a long term investor I don't want to be forced into a sale of my investments with very little notice because Hargreaves Letusdown have introduced or increased their platform charge.

Selling investments could have capital gains tax implications and having no control over the platform charge you are in danger of not being able to sell because of the capital gains (for example) and therefore having to pay whatever platform fee they set. I don't want to be held at ransom.

If they are going to change a fee like this then they should a) give much more notice e.g. 6 months and b) be offering the option of free re-registration of your funds with another platform, albeit they may be forced to offer free registration in the future through legislation.

dunstonh

I wonder if this is HL dipping their toes in the water to see how many accounts they lose before they have to introduce full explicit charging (assuming no u-turn by the FSA).

£2 is not much and its certainly a temporary position given the RDR and the platform review.

I suppose, if HL can't afford to do it, then iii might well follow suit. Presumably they've got some RDR-related plans of their own, anyway.

There is not one platform that is RDR compliant at this time and the platform review still has a significant amount of detail to resolve. All we really know on that is that the FSA is banning commission.

You can only hypothesise what the different platforms will do at this time. However, HL had £24.6 billion on platform in June. Their take is around 0.8%. Post RDR and platform review they can still keep it on legacy until people change funds (and you would expect most DIY investors to do so). So, that 0.8% of nearly £25 billion would vanish. Something has to replace it and £2 isnt going to be enough.