Why was Hargreaves Lansdown singled out in the Budget?

Why is Hargreaves Lansdown being handed free publicity and a government seal of approval? As for the banks, they seldom offer independent financial advice. The Chancellor should be encouraging people to seek independent advice locally and investing in national financial education to raise overall literacy. Maybe the Chancellor is considering her options after politics?

It is, frankly, deeply inappropriate for Reeves to endorse Hargreaves Lansdown or Vanguard as an “expert” for people to turn to for investment decisions, given that it is primarily a direct-to-consumer, execution-only platform rather than a provider of holistic, independent financial advice. Elevating one listed firm from the dispatch box looks uncomfortably like an official endorsement of that firm over its competitors. It also raises obvious questions about conflicts of interest and the appropriateness of the Treasury appearing to funnel retail business towards a single commercial brand, undermining the value of regulated advice. At the very moment when complex policy changes are being proposed around ISAs, pensions and salary sacrifice, you would expect the government to underline the importance of independent, regulated advice and proper financial planning.

The Chancellor seemingly using the Budget to effectively promote individual companies — let alone single, non-independent providers — is extraordinary. Budgets shouldn’t be used to single out commercial firms, and ministers should avoid even the perception of favouritism. It raises the uncomfortable question of whether she may have strayed close to breaching the ministerial code by appearing to promote a small number of companies. Instead of offering what sounded like endorsements of one platform — and others — the Chancellor should have encouraged people to seek independent, regulated financial advice. Independent advisers can access the whole market and provide genuinely tailored, client-focused recommendations — something no single provider can deliver. What could have been a perfect opportunity to champion the independent advice sector has instead been squandered. Instead, we seemingly have a victory for large companies and their paid lobbyists.

The Chancellor was wrong to single out a few companies and wrong to suggest banks should guide people into investments. Independent and regulated financial advice is what savers need, not product pushes from some institutions with vested interests. Banks largely abandoned in-branch investment advice after the 2012 Retail Distribution Review exposed the dangers of commission-driven, restricted advice that led to widespread mis-selling. Re-opening that door risks repeating old mistakes. If the government truly wants to turn savers into investors, it should empower people to access independent financial advisers who can give unbiased, holistic guidance, not point them toward providers or banks with limited product ranges and commercial motives.

It was certainly surprising to hear Hargreaves Lansdown singled out by the Chancellor. It is the largest of the UK direct-to-consumer investment platforms, but it's by no means the best option for most people. Our independent analysis on fees shows that they are often one of the most expensive providers, unless you're using them to open a Junior ISA. For adult Stocks and Shares ISAs, there are far better options available, by which I mean, cheaper options, ones offering higher past performance figures on ready-made portfolios, ones offering a more tailored experience for beginners, and ones offering an easier, more technologically advanced user experience.

I applaud the government for trying to encourage more people to boost their wealth through investing, as history shows us that long-term investment returns are likely to be higher than if you'd kept savings in cash, but people need far more help understanding which provider and product is right for them.