The chief executive of Hargreaves Lansdown has announced he will quit as investors continue to flee Britain’s biggest investment platform and as the company faces a multi-million pound lawsuit over its promotion of funds run by Neil Woodford.
Chris Hill, who has led the FTSE 100 company since 2017, said he will step down by November next year.
News of his departure comes days after Hargreaves was hit with a multi-million pound lawsuit on behalf of thousands of investors for promoting the former star stockpicker Neil Woodford’s failed equity income fund.
The lawsuit alleged that Hargreaves continued to promote the once star fund manager’s LF Woodford Equity Income Fund (WEIF) up until its collapse in 2019. Hargreaves did so despite admitting it was aware of troubles at the fund since 2017, RGL claimed. Hargreaves denies the allegations.
Mr Hill's departure also comes after a tumultuous 12 months for Hargreaves.
Shares in the DIY investment platform have plunged more than 50pc in the last year as the war in Ukraine and the deteriorating economic environment stifles customers’ willingness to invest.
Assets under administration fell to £122.7bn at the end of September, down from £123.8bn at the end of June. This time last year, assets stood at £138bn.
New business is also slowing. Alongside news of Mr Hill's planned exit, Hargreaves said net new clients number and net new business for its first trading quarter were both down. New business dropped to £700m, compared to £1.3bn a year ago.
However, total revenues jumped 15pc thanks to higher interest rates.
Mr Hill said: “The impact of the challenging macroeconomic and geopolitical backdrop on asset values, client confidence and propensity to invest has been seen across our industry.”
He added: "Although flows into risk-based investments remain subdued, both client and asset retention rates remain strong and in line with last year.”
Mr Hill announced a new five-year strategy for the company in February aimed at turning around performance. A key part of the plan is a £175m investment in Hargreaves’ technology, including plans to build a new financial advice service. The investment will be funded in part by cutting dividends.
Deanna Oppenheimer, the company’s chairman, said: “Having started the implementation of the next phase of the company’s growth, Chris has decided it is time to pass the reins to a new chief executive to continue to execute on this strategy.”
Hargreaves Lansdown has faced increased competition in recent years from new trading platforms.
Analysts at JP Morgan said: "The departure of the CEO will raise questions on whether a new CEO might decide to lower Hargreaves Lansdown fees, which would make it regain competitiveness, but with short-term substantial headwinds to revenues.”
Shares dropped as much as 7pc on news of Mr Hill’s departure.