£50m pay day axed by City watchdog

Billionaire founder of Hargreaves Lansdown blasts FCA after special dividend is blocked

THE billionaire co-founder of Hargreaves Lansdown has slammed regulators after they barred the investment group from paying a £50m dividend.

Peter Hargreaves said it felt as if the company was being ‘victimised’ after the Financial Conduct Authority ordered it to set aside the cash instead of handing it out to shareholders.

The watchdog said the business’s rapid growth meant it had to hold back £50m extra in case of a possible downturn.

Investors would otherwise have been given a special dividend likely worth around 9.9p a share.

Hargreaves, who launched the firm in his bedroom in 1981, owns 152.6m shares worth £2.1bn and would have pocketed £15m from the giveaway.

His co-founder Stephen Lansdown has 75.5m shares worth £1bn and would have picked up £7.5m in special dividends.

Regular shareholders will also suffer, many of them company employees who have earned stock as a reward for their service. An investor holding 1,000 shares will miss out on £99.

‘I’m a little bit bemused as to why we almost seem to have been victimised,’ said Hargreaves, who is the firm’s largest shareholder but is no longer an employee or director and does not speak on its behalf.

‘I can’t understand why the company seems to get legislation piled onto it, and has to jump hurdles and hoops when it would appear to be the cleanest of clean businesses. Our track record is 100pc. We’ve never transgressed.’

The blow was revealed in a stock market announcement by Hargreaves, which runs an online trading platform used by 954,000 investors. Shares in the company fell 2.6pc, or 36p, to 1347p, knocking £54.9m off the value of Hargreaves’ holding and £27.2m from Lansdown’s.

Bosses said the FCA told them on Thursday that it intended to reassess their regulatory capital requirements due to the company’s ‘strong recent growth in scale and complexity’.

Chief executive Chris Hill said the news was ‘disappointing’ but the business was ‘in great shape’.

Hargreaves Lansdown said that for the year to June 30, the assets it oversees are expected to have risen by 28pc to £79.2bn. Profits are expected to be between £265m and £266m, up 21pc.

Hargreaves, who was chief executive until 2010, said he was concerned that the regulatory crackdown was part of a wider assault on success.

He said he would not have such a large shareholding if he thought there was any risk, and that the company paid the high- est proportion of tax compared to its revenues of any UK business. It gave £41.6m to HMRC in its last financial year, on turnover of £388.3m.

‘Is that what’s happening in this country – if you’re profitable, you’re seen as a horrible person?’ Hargreaves said. ‘It’s gone mad. What are we doing wrong?

‘I would just love somebody from the FCA’s building to explain to me what we’re doing wrong.’

The FCA did not comment.