Fund buy lists based on commercial links could be misleading investors, according to MP and Treasury Select Committee chair Nicky Morgan.
Speaking at the Investment Association’s Annual Policy Conference today Morgan said: “Hargreaves Lansdown confirmed that the criteria for including funds on the [Wealth 50] list depended on discounts as well as on funds’ performance.
“I think it is fair to say that many people who logged onto their HL account and saw HL top 50 list, assumed these were the top 50 funds that Hargreaves thought performed well, not the 50 funds that may have lower negotiated fund fees.
“As we all know, firms regulated by the FCA must treat their customers fairly,” Morgan said and went on to ask whether such lists are fair.
The chief executive of the FCA, Andrew Bailey, told the BBC earlier this month the regulator would be taking another look at fund buy lists in the wake of the Woodford Equity Income fund being suspended.
The flagship fund was suspended on 3 June after the fund came under scrutiny by industry experts due to rapid outflows and underperformance in recent months.
The fund appeared on Hargreaves Landown’s Wealth 50 list right before its suspension. Hargreaves had been a bullish supporter of Woodford, even as others criticised his performance and methodology.
Morgan said today if funds are being “pushed on to customers, it gives the look and feel of advertising or financial advice. It should be…regulated accordingly.”