Hargreaves Lansdown has been slammed by shareholders after the stockbroker introduced charges for clients who want to vote at annual general meetings (AGMs).
Hargreaves, led by Ian Gorham, has decided to apply a £10 fee plus VAT to any individual shareholder who wants to attend or vote at an AGM, rights issue or other shareholder ballots.
This is the first time the charge has been introduced as the service used to be free.
Catherine Howarth, who heads the campaign group Share Action, confirmed ShareAction had been contacted spontaneously by Hargreaves' clients, angered at the new fee.
‘Small investors, who used to be the lifeblood of the shareholder register of this company, have been more and more squeezed to the margins and now are even been charged to cast their votes.’
‘This is a new policy and we hope that Hargreaves Lansdown will reverse it rapidly as a result of the customers’ pressure.’
Tom McPhail, Hargeaves' head of pensions research told Wealth Manager the stockbroker was 'not wedded' to the charges.
'We've applied it because it's a proportionate charge to cover the administration cost of obtaining our clients' views and passing those on to the company involved.'
McPhail explained the platform was 'actively' looking at the adoption of an electronic process, which would allow the firm to review those costs.
'If we can find ways to reduce the cost of administrating this service using techonolgy, then that creates some scope to potentially reduce or eliminate the charge.'
He insisted only a 'small proportion' of Hargreaves' clients currently excercise their rights. 'Out of 600,000 clients, only 16,000 actually excercised their voting rights last year. That was before we introduced the £10 charge.
'However, it was notable that even before the fixed charging, when it was effectively free, that only 16,000 clients voted. While we applaud and support investors excercising their voting right, it is apparently something for which their is not a high demand.'
He added Hargreaves was unable to 'judge what impact the charges will have'.
Howarth said no other listed broker firm currently charges its customers to attend AGMs or vote and warned that small shareholders could face hefty bills at the end of the year.
‘If you have a portfolio of 20 or 30 stocks, a £12 fee would be a very expensive proposition at the end of the year. We are talking about £400 or £500 bills for those shareholders wanting to go to a certain number of Hargreaves Lansdown meetings. It is a very bad move.'
She added: ‘We don’t know of anybody else who charges its customers to attend AGMs or vote their shares. In fact, we know that the Share Center and Brewin Dolphin are two stockbroking platforms that are actually really helpful and and go out of their way to make it easy for customers to do this, and certainly don’t charge them.’