How safe is your investment?

Below we give a summary of the key protections that apply to you as a private investor.

1. HL is regulated by the Financial Services Authority (FSA) and is bound by their rules and regulations in the conduct of our investment business. Hargreaves Lansdown Asset Management Limited and Hargreaves Lansdown Stockbrokers Limited are authorised by the FSA to hold client money and client assets. You can telephone the FSA Consumer Help Line on 0845 606 1234 (8am-6pm Monday to Friday), to check our registration or ask other queries. Alternatively, you may write to them at the FSA Consumer Help Line, 25 The North Colonnade, Canary Wharf, London, E14 5HS or you can visit www.fsa.gov.uk

   The FSA requires firms to publish certain information to enable the market to assess a firm's risks, capital and risk management procedures - known as Pillar 3 disclosure - 2008

2. We make regular submissions of our solvency to the FSA, together with annual audited financial statements, annual audited returns of information and a report from the auditors assessing our compliance with the FSA client money rules. Our annual reports and accounts are available here. These demonstrate that we take a very conservative approach to accounting – no borrowings and we hold considerably more cash than the regulations require. The majority of our income is generated from renewal commission. We share this with our clients and this further aligns our interests with theirs. It is a secure source of income as it is spread across a large number of providers and new business takes a long time to translate into profits, so unlike many firms we are not dependant on short term new business to cover our costs.
3. All client money is held on deposit in Trust accounts, so that any creditors of Hargreaves Lansdown would have no legal right to it, we cannot use any of this money to cover the company’s obligations, and is subject to controls and procedures over and above those required by the FSA.
   
   In addition, client money held within the Vantage Service is spread across a number of banks. Our policy is continually reviewed and the primary consideration is always security. Except where clients have chosen specific fixed rate deals, client money within the Vantage Service is spread between the most secure banks in the UK.
   
   On 8 October the British Government announced a support package which effectively provides three guarantees to UK savers.
   
   
   • There is an implicit guarantee that the government will always support bank deposits, confirmed by actions taken for private individuals who held Icelandic bank accounts.
   • The Financial Services Compensation Scheme (FSCS) provides that each individual is entitled to up to £50,000 in total in compensation for losses across all their deposits with that institution. Our current policy, which spreads cash between a number of different institutions, means that our clients should receive this level of protection with each of the banks we use.
   • The Government has made funds available to guarantee the wholesale funding of eight banks and building societies - Abbey, Barclays, HBOS, HSBC, Lloyds TSB, Nationwide, Royal Bank of Scotland and Standard Chartered - which should ensure these banks can sustain their operations going forward.

   These eight banks offer the highest level of security and we shall not go outside these institutions for money held within Vantage. For the foreseeable future, we have decided to confine the banks we use to five - Barclays, HBOS, Lloyds, HSBC and RBS.

   Stock you hold with us is held by Hargreaves Lansdown Nominees Limited, a non-trading company which is a member of the Hargreaves Lansdown Group of Companies. As a non-trading company it cannot run up liabilities of its own and Hargreaves Lansdown accepts full liability for any default by our nominee company. All your assets are held in an account designated with your name and, as with client money, are subject to controls and procedures over and above those required by the FSA.
   
   We do not lend any stock held in Vantage.
4. Investors are likely to be covered by the provisions of the Financial Services Compensation Scheme (FSCS), if Hargreaves Lansdown ceases trading. It can award up to £48,000 in compensation to any one investor where they decide that an investment business is in default and is unable to satisfy any claims against it. In addition, if one of the banks which we use for depositing cash balances is declared in default, each individual is entitled to up to £50,000 in total in compensation for losses across all their deposits with that institution (increased from £35,000 on 7 Oct 2008). Full details of the FSCS detailing the restrictions and financial limits that apply are available on request from the FSCS. You can contact them on 0207 892 7300 or at www.fscs.org.uk. You can also write to them at FSCS, 7th Floor Lloyds Chambers, Portsoken Street, London E1 8BN.
5. All Hargreaves Lansdown Group companies are registered in England and Wales and consequently are governed by the Companies Act, which includes a requirement to have the financial accounts audited each year by independent accountants, we currently use the international firm Deloitte, which is one of the big four chartered accountants in the world. They also do our regulatory audit.
6. Hargreaves Lansdown Asset Management Limited is also registered with HM Revenue and Customs to enable us to act as an ISA and SIPP manager. Accordingly, our procedures for operating ISA and SIPP Plans are also independently assessed by HM Revenue and Customs.
7. Unit trusts and Oeics use a trustee or depositary to actually hold the title to the underlying stocks they hold in their funds. This means that if the fund manager gets into financial difficulty your assets are protected from their creditors. The time that the FSCS does not protect you is if one of the underlying stocks within a fund manager’s portfolio goes bust.

We want to ensure that everybody who invests with Hargreaves Lansdown is content about the nature of the investment that they have made and the various protections that are available to them. Accordingly, please feel free to contact us at any time if you would like to discuss the contents of this fact sheet in greater detail.

Hargreaves Lansdown Group comprises the following regulated companies: Hargreaves Lansdown Asset Management Ltd, Hargreaves Lansdown Stockbrokers Ltd, Hargreaves Lansdown Pensions Direct Ltd and Hargreaves Lansdown Fund Managers Ltd.

Information correct as at 31 December 2008. Assets under management £9.9 billion.