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, our 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, said: “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 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).
AJ Bell lost over one hundred grand of my pension funds when I transfered the money to them during the Christmas period a few years ago. During numerous telephone calls trying to get them to acknowledge the loss, one could hear the Christmas office parties underway in the background. Later after the intervention of a prominent financial magazine editor the money was found , apparently there had been a "IT Error" . Obviously the computers were nissed as well. The fact that this company wants to retain exit fees does not surprise me ,they are used as shackles with which to dissuade clients from leaving.