Woodford lets Hargreaves clients take discounted fees to rivals

D2C platforms welcome the chance to take on dissatisfied HL clients

Woodford has given the go ahead for Hargreaves Lansdown clients trapped in its Equity Income fund to take their discounted fees to rival platforms.

The update, which was revealed on a Q&A page about the Woodford Equity Income fund suspension, comes one day after Interactive Investor wrote to the Treasury select committee complaining that it had been unable to take transfers from Hargreaves Lansdown clients. AJ Bell confirmed it had also been unable to accept transfers of Woodford holdings.

Hargreaves had used its bargaining might to drive a 33% discount on the annual management charge taking it to 0.50%. The discounted fee is accessed via the Z share class but rival D2C platforms offer the C share class, which has a 0.75% fee. Hargreaves has waived its platform fee for investors trapped in the former Wealth 50 fund meaning investors may end up paying more to access the fund at a rival platform.

FCA regulations an obstacle to transfers

A spokesperson for the fund’s authorised corporate director Link Fund Services said: “FCA regulations stipulate that no dealing is allowed during the suspension, which places significant obstacles to enabling a customer to move from one investment platform to another where it would mean a change of share class.

“Link Fund Solutions had already enabled investors to transfer between platforms when no such change in share class is needed. After lengthy discussion with Woodford, transfers between platforms across all share classes, but not share class conversions, will now be allowed with immediate effect.”

Hargreaves welcomes changes

Despite the fact the change will facilitate clients wishing to exit the platform, Hargreaves said it had made “numerous” requests to Link to transfer all Woodford Equity Income share classes between platforms. A spokesperson said they were pleased that Woodford and Link had made the changes.

Platforms without the Z share class would incur a cost from introducing it, said Lang Cat director Mike Barrett. “It also creates an issue for the platforms existing customers who are in Woodford. The Z class is cheaper than the existing clean share class, so these customers would be better off if they converted to this.”

Interactive Investor chief executive Richard Wilson said he was “pleased to see a swift resolution to what was an untenable situation”.

AJ Bell also welcomed the move.

“The fact that transfers from Hargreaves Lansdown to other platforms were being held up due to a technical share class issue was particularly annoying for investors wanting to move their money out,” said personal finance analyst Laura Suter. “At such a stressful time for investors, this should help to ease at least some of their frustrations.”

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