Before the fee removal, Hargreaves Lansdown charged a £30 fee to close an account
Hargreaves Lansdown, the online broker, has announced that it will scrap its controversial exit fee.
Before the fee removal, Hargreaves Lansdown charged a £30 fee to close an account, alongside a £25 charge per fund or stock and £25 for any cash holding. Those closing a pension early were also hit with a £295 fee.
In an announcement, Danny Cox, head of communications at Hargreaves Lansdown, says: “We have removed exit fees and think everyone else in the industry should do the same.”
Exit fees for investment platforms have come under increased scrutiny in recent years. Earlier this year, the Financial Conduct Authority announced its intention to either ban or cap fees.
Some investment platforms, such as interactive investor (Moneywise's parent company), have been vocal in their calls for the industry to scrap exit fees. interactive investor permanently scrapped exit fees for all its customers last November.
Commenting on Hargreaves Lansdown news, Richard Wilson, chief executive of interactive investor, says: “This move throws down the gauntlet to the wider industry, which has dragged its heels on this issue. As we await the regulator’s final decision on exit fees, let’s see if other major platforms can call time on exit fees without further arm-twisting.
“What we would like to see is an outright ban on exit fees for existing customers, not just new business going forward. It is the only right thing to do.”
In their announcement, Hargreaves Lansdown also called for an industry wide crackdown on exit fees, with Mr Cox saying: “We continue to support a ban on all exit fees, provided this is industry-wide and not just confined to platforms, which would distort the market.”
Not all platforms, however, agree that exit fees should go.
AJ Bell has previously defended exit fees, arguing that some fee is needed to cover the administrative costs. They have previously argued that customers would be subsidising leaving customers if the fees were abolished completely.
Other fee changes
The decision to scrap exit fees is part of wider change to Hargreaves Lansdown’s charging structure.
In a bid by Hargreaves to simplify their fees, the platform has announced a total of nine fees being scrapped, including the removal of a charge to reinvest fund income, which was 1% of the trade value (minimum £1, maximum of £10).
This article first appeared on our sister website Money Observer
This article was originally published in our sister magazine Moneywise, which ceased publication in August 2020.
These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.