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Change to Hargreaves Lansdown transfer charges?

Investment | ISAs Helpful? 13

Asked by mikeat33, submitted 15 May 2014.

Open Quote Can you clear up an uncertainty about charges for transferring funds/shares in ISA/Sipp's with Hargreaves Lansdown to another platform? In the MoneyBox programme of 18 Jan you stated that on 2 June HL would be introducing exit penalties which "aren't there at the moment". I presume this is the £25/fund charge. It is my understanding that there was no exit fee for transferring funds prior to the new schedule of charges in January.

I had presumed that there was a window until 2 June when this arrangement would continue. Danny Cox appeared to confirm this in the programme. Have I misunderstood the situation? Was there never a transitional arrangement?
I would prefer to transfer funds as such and not to have to convert to cash prior to transfer.
End Quote

Answered by Justin on 02 June 2014

I realise this answer is a little bit late given the changes have taken place today, but I think it would be helpful to clarify how these charges apply.

When you transfer investments (funds or shares) from one platform to another you have two options:

1. Sell them and transfer the proceeds as cash, with which you buy funds/shares on the new platform.

2. Transfer the investments ‘as is’, usually referred to as an ‘in-specie’ transfer.

The advantage of an in-specie transfer is that your money is never out of the market during the transfer process. And if your investments are held outside of a tax wrapper (e.g. ISA/pension) then this method will avoid realising potential gains or losses for capital gains tax purposes. The downside is that it can take weeks or even months to complete, depending on the efficiency of the respective platforms and, if relevant, fund managers (who basically need to update their records to complete the process).

Cash transfers are usually faster, but may leave your money out the market for up to a week or more, so you may profit or lose out from market movements meanwhile. If dealing fees are applicable you’ll have to pay them.

Referring this back to Hargreaves Lansdown:
Up until 2 June HL did not charge for cash transfers from its ISA or Fund & Share accounts, and the cost per fund or share transferred in-specie was £25. The HL SIPP charged a £75 transfer fee which included cash and/or all in-specie transfers.

From 2 June 2014 HL now charges an account closure fee of £25 & VAT for its ISA, Fund & Share and SIPP accounts, with a further £25 for cash transfers and £25 per fund/share transferred in-specie.
So the ISA and Fund & Share accounts have a new account closure charge as well as cash transfer charge, while the in-specie charge per investment remains the same.

And the SIPP has a lower account closure charge but new charges for cash and in-specie transfers.

On balance the cost to transfer out of HL has probably just gone up for the majority of its customers.

Please note this answer does not constitute a recommendation or financial advice and should not be relied upon when making specific investment or other financial decisions. You should always undertake your own research into whether a product or service is appropriate for your needs and, if necessary, use a qualified professional adviser.

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