Hargreaves ready to respond to potential price war

Platform giant Hargreaves Lansdown has said it is ready for any price war started by rivals looking for a foothold in the direct to consumer market.

In a conference call with analysts following the firm's interim results, chief executive Ian Gorham said while Hargreaves would not slash prices without provocation, it would respond even if it meant a temporary dip in revenues.

"If we put down our prices by 20% we wouldn't see a 20% growth in assets. At the moment it's not a particularly price driven market," he said. "But we would compete with anything we need to compete with... we would respond."

Hargreaves has so far refused to disclose detailed plans for ‘RDR 2' - the platform changes expected to be brought in by the Financial Services Authority (FSA) in 2014 - but said there was little benefit to releasing its charging structure before the finalised guidance from the FSA, expected by the end of the first quarter.

"We are often challenged on when Hargreaves will bring out post-RDR 2 pricing," he said. "This stuff doesn't exist yet: it's only a consultation and it could still change.

"If you are a regulator writing for consultations you can be pretty free and easy with what you suggest. The rules are going to have to be a lot tighter."

Neither were there any benefits from being "an early mover" without brand power, he added.

Last week, Charles Stanley launched its D2C offering headed by former Hargreaves investment manager Ben Yearsley, with a fee-based structure compliant with the expected rules arising from RDR 2.

"Some interesting concepts have come out," Gorham said. "Initially they get a lot of interest but when it comes to gathering assets - where scale and reputation really matter - it's very difficult to be successful.

"Within a mile of my house there are probably a million people selling milk, but I have no idea who they are. We are the go-to place for investing in the UK directly."