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H-L introduces a Tracker Platform Charge
Comments
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Wonder if Hargreaves Letusdown would be able to defend a complaint on this, that was taken to the Ombudsman.
The investments will have been bought on an execution only basis of course. However there is a requirement on HL to provide accurate information to enable investors to make an informed decision. Was the risk that the investor's charges would in some cases be more than doubled a material omission in the information provided by HL? Yes we know there was a provision deep in the terms and conditions that charges could be increased with 30 days notice but we all know you can't just rely on small print like that.
Consider for argument a hypothetical new investor who has recently invested a £1,000 in each of a number of the HSBC trackers in the last few months. In their case the £24pa fee represents a more than doubling of charges almost immediately after the investment was taken out. So was the HL documentation inadequate in not clearly pointing out the risk of an almost immediate doubling of charges?
You only have to look at the posts from those in the process of investing now who are pulling out to realise that if full information had been provided then this hypothetical investor may not have decided to invest with HL.
So has a loss been incurred by this hypothetical investor who wouldn't have invested had they been given full information? As there is no option for funds to be reregistered at zero charge then arguably there is a loss. To get out now you will need to sell your investment and then buy funds from another provider or platform. The money during this time is subject to fluctuations in the market. There is also a time lag between selling and getting back into the market where you are getting no return.
I wonder what the Ombudsman would decide if such a case was brought to them.I came, I saw, I melted0 -
webnibbler wrote: »Too late for me. Set up my SIPP with H-L less than two months ago, all in the HSBC tracker range. Don't think I have the energy to start the move to another platform right now.
My thinking is to wait and let all the effects of RDR on the platforms settle before making any decision to move to another provider. Who knows what changes may be coming.
I agree it might be time to wait and see what happens to other providers or we may end up leaping into the frying pan. I would like to know exactly how they are going to collect these new charges.0 -
If that's the case this all could end up being good news.gadgetmind wrote: »More news. HL have said in emails to those complaining that they intend to shortly introduce the Vanguard range. I have emailed to ask if this will include the LifeStrategy range as these are a portfolio in a single tracker. £24pa for this is very cheap IMO!
What this boils down to is the question of whether a 30 day notice period for material changes made to the terms of this agreement is fair. I'm not sure that a longer notice period would make things much better though.So has a loss been incurred by this hypothetical investor who wouldn't have invested had they been given full information? As there is no option for funds to be reregistered at zero charge then arguably there is a loss. To get out now you will need to sell your investment and then buy funds from another provider or platform. The money during this time is subject to fluctuations in the market. There is also a time lag between selling and getting back into the market where you are getting no return.
I wonder what the Ombudsman would decide if such a case was brought to them.
One option open to them is to offer to waive re-registration fees for disgruntled customers who contact them to say they are transferring out because of these new charges. I'd imagine pursuing HL for those re-registration fees would be the best complaint to take to the FOS.0 -
One option open to them is to offer to waive re-registration fees for disgruntled customers who contact them to say they are transferring out because of these new charges. I'd imagine pursuing HL for those re-registration fees would be the best complaint to take to the FOS.
I tend to use a tame solicitor in these situations, who looks at my *massively* detailed notes, bangs off a letter, and gets results in 99% of situations as it looks like we're a scary great white shark. Of course, in reality we're a toothless goldfish, but who's to know?I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
gadgetmind wrote: »More news. HL have said in emails to those complaining that they intend to shortly introduce the Vanguard range. I have emailed to ask if this will include the LifeStrategy range as these are a portfolio in a single tracker. £24pa for this is very cheap IMO!
[edit]
What they actually said was -
"Previously, we had covered the costs of providing a number of tracker funds, but as demand for these funds has increased so have our costs. We are therefore introducing a platform fee to cover these costs and allow us to increase the range of funds we offer. We expect to be able to offer Vanguard funds shortly, for example. Like all other funds they will be available with a minimum of £1,000 (£500 is the Junior ISA) and we will make no charges to buy or sell."
no-one suddenly likes being hit with new charges but I am sure its true that a lot of people, like me, just have one or two trackers with them and they make nothing.
What is good about the Vanguard funds? Can someone explain a bit more about them?
I have only got one tracker, a FTSE all share, I suppose I could change to a ETF bought through a cheap broker such as X-O0 -
moneylover wrote: »I am sure its true that a lot of people, like me, just have one or two trackers with them
Really? Does this really provide a good sector and asset spread, with a balanced mix of developed/emerging, equities/gilts, large/mid/samll cap, property and commodities?What is good about the Vanguard funds? Can someone explain a bit more about them?
More variety, lower TER, better tracking, and LifeStrategy variants.I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
Wonder if Hargreaves Letusdown would be able to defend a complaint on this, that was taken to the Ombudsman.
Easily. They only have to give notice of the change of terms to give you a chance to leave them before you are charged.
It costs you nothing to transfer to another platform if you dont like it.So was the HL documentation inadequate in not clearly pointing out the risk of an almost immediate doubling of charges?
Any date involves a line in the sand being drawn.I wonder what the Ombudsman would decide if such a case was brought to them.
May not even get as far as the review stage but filtered out as being outside the remit of the FOS. The FOS cannot make rulings on commercial decisions. Just rule breaches. There is no rule breach here and it is a commercial decision.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
The problem with an ISA transfer is that you can't trade for the length of time that it takes. This could easily cost.It costs you nothing to transfer to another platform if you dont like it."It will take, five, 10, 15 years to get back to where we need to be. But it's no longer the individual banks that are in the wrong, it's the banking industry as a whole." - Steven Cooper, head of personal and business banking at Barclays, talking to Martin Lewis0 -
They haven't announced it as far as I am aware! It has just suddenly appeared on the fund factsheets within the past 24 hours or so.
I just spotted it in the Investment Times newsletter. I'm surprised that for a change of this magnitude they have not contacted customers directly. In every other respect I have been very pleased with HL customer service but this level of change to me should have generated personal letters or emails to customers affected as HL know exactly who holds the funds that would be covered.
Alliance Trust charge £25 per year to hold an ISA so I'm planning to move to them. I prefer the HL platform but as I have most of the HSBC trackers I'll be paying far more to hold those with HL in future.Remember the saying: if it looks too good to be true it almost certainly is.0 -
It costs you nothing to transfer to another platform if you dont like it.
As has already been said whether it costs to transfer out is the key point here.
From my very limited knowledge of RDR there will be a requirement for free reregistration (i.e. transfers out) for those switching platforms from 31 December 2012 or whenever the rules come in. Whether that comes in I don't know but it strikes me that the FSA want to make sure absolutely that a platform can't (say) quadruple fees but then charge people for transferring elsewhere.
At the moment I am looking at what the reregistration fees are going to be in this case to transfer funds away from HL (I haven't yet identified these but I do think there is a charge from what I have previously read).
If HL waive the re-registration fees for investors transferring away then that is perhaps fair enough. If they don't then I believe they are subject to challenge through formal routes, I wouldn't be so sure that a formal challenge on that basis will absolutely fail.I came, I saw, I melted0
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