Customers that invested in Neil Woodford’s suspended flagship fund through Hargreaves Lansdown have been blocked from switching investment platforms, according to evidence submitted to the Treasury Committee’s inquiry into the scandal.
Richard Wilson, chief executive of rival fund supermarket Interactive Investor, said investors had “both hands tied” after Link Fund Solutions, the authorised fund manager, blocked customers transferring from Hargreaves Lansdown to another platform.
Woodford customers are also unable to withdraw their savings while the Equity Income fund remains indefinitely suspended.
Hargreaves Lansdown customers have £1.6bn tied up in the Woodford Equity Income fund.
The investment platform has come under fire for including Neil Woodford’s fund on a “best buy” list despite recognising issues with its level of illiquid assets.
Wilson said investors were unable to transfer ownership as a change in share class would be required. However, he said the change is a “simple record keeping matter”.
“Link’s decision appears to have no sound rationale or practical operational basis and given the number of consumers holding the fund this has a detrimental effect on choice and competition,” said Wilson in a letter to Nicky Morgan MP, who chairs the Treasury Select Committee.
He added: “Currently, investors who hold LF Woodford Equity Income fund have both hands tied behind their back – they can neither exit the fund, nor transfer their assets to platforms which might better suit their needs. At what is already a difficult time for these investors, we think this is unacceptable.”
Hargreaves Lansdown declined to comment. City A.M. has contacted Link Fund Solutions for comment.