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Hargreaves Lansdown has been criticised in a national paper for not fully disclosing its financial arrangements with fund managers.
Writing for the Daily Mail, Richard Dyson said Hargreaves is wrong to keep fees so secret.
He said Hargreaves Lansdown is "at a crossroads" with most of its revenue still in the form of commission paid to it by fund managers whose funds it recommends and sells.
"This model, especially in a post-banking crisis world where customers are justifiably suspicious of all commission, looks distinctly creaky. All around, in other fields of investment, calls are growing for greater transparency and for an end to secretive payments between companies and intermediaries," Dyson writes.
He also highlighted potential concerns with Hargreaves' Wealth 150 top list of recommended funds, which are selected by its research team.
"The Wealth 150 is hugely influential. It is feared by the fund management world just as much as it is slavishly followed by private investors who trust Hargreaves' choices.
"The recommendations of the Wealth 150 have channelled hundreds of millions of pounds the way of certain fund managers such as Invesco Perpetual, Jupiter and others. But what investors do not know is the extent of the commission that Hargreaves receives from these and other fund managers," according to Dyson.
"However thorough and credible the work of the company's research team in selecting these hopefully top-performing funds, the existence of secret commission payments is a problem."
He said commissions, especially those negotiated and paid behind closed doors, tend to align Hargreaves' interests with those of the fund managers rather than the private investors it is supposed to serve.
To read the full article click here.
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| Comment | Hargreaves and Wealth 150 attacked for 'secret commissions'-papers |
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So what
For an arranger I don't see what the problem is. If they were an adviser that is different. Having a Wealth 150 list which people trust, that is not their concern I'm afraid.
Posted by: Harry
Whose fault?
@ Harry, that is the crux of the issue surely? People believe they are getting advice and make buying decisions on that premise, that and the fact that HL 'don't make any money out of me'. Mistaken beliefs yes, but that is what happens. I'm sure HL operate within the letter of the Law but maybe they aren't as altruistic as they seem to be on the surface. IMO the shortcoming is not necessarily HL's actions as the failure of the regulators to understand what was going on and require HL to disclose the fact.
Posted by: JPG
Surely not!
I'm sure I recall reading how according to Hargreaves, the FSA love the H-L model and indeed it was the only RDR compliant business at the time of writing. Mmmm?
Posted by: Duncan Carter
newspeak "Advice"
With the FSA actively misleading the public into thinking that information is advice by mis-naming their new information service "advice" how can the public possibly distinguish between the two? When it comes to destroying any remaining trust in the financial services sector, the FSA doesn't like to miss a trick. One can't blame HL if the public uses their list as an instruction manual.
Posted by: Michael Both
Pandoras box
Not before time is the non commission myth of the media lovies being exploded.
Posted by: Terence P.O'Halloran
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After the horse has bolted
Proper IFAs have trying to tell the industry for ages about these charges. Now that St Hargreaves has made his millions the regulator has missed it's chance to do the job once again!
Posted by: Incompetent Regulators Awards Team