‘I have wasted my daughter’s money with Hargreaves’

broker on an influential best-buy list of its favourite funds.

Hargreaves recently removed all Woodford funds from its Wealth 50 list, but only after the £3.7bn Equity Income fund was forced to suspend trading last month.

Mr Woodford was once hailed as “the British Warren Buffett” but his reputation is now in tatters. A string of failed investments caused investors to leave in their droves and the fund manager became unable to meet redemption requests thanks to the unusually high concentration of illiquid companies in his portfolio.

“During my pregnancy I received leaflets from midwives detailing a wide range of offers including Junior Isas, both before and the day after my daughter’s birth,” Ms Huband said. “I still have the free Hargreaves Lansdown money box from opening the account.”

Almost 300,000 Hargreaves investors have a total of more than £1.6bn trapped inside the suspended fund and are unable to sell. “Accumulation units” in the fund, which is still being priced daily, have fallen by more than 6.7pc in value since the fund went into lockdown on June 3.

Justine Roberts, founder of Mumsnet, the parenting website, has been campaigning on the subject of marketing to new mothers for the past six years.

“Our users have always thought it’s pushy and exploitative to give sales reps access to inpatients on postnatal wards, and frankly they’re horrified that NHS trusts still allow it,” she said.

“Women who’ve just given birth are almost always pretty shattered and many are recovering from surgery or serious injuries, or desperately worried about babies in special care. It isn’t the time for making purchase decisions and particularly not on complex financial services products.”

Ms Huband said she had invested in the Equity Income fund after reading about it on Hargreaves’s best-buy list, which has come under fire from MPs and investment experts since the suspension.

She said: “When you open the account the number of funds to invest in is overwhelming, particularly for a parent. I put half of the money into the Woodford fund, as recommended by Hargreaves, alongside one more, in an attempt to diversify my pot.

“I am really upset that I have wasted my daughter’s money with Hargreaves. I recognise there is a risk when you invest, but I do think that it has a responsibility, particularly when it comes to children’s accounts, on how it recommends funds. Sadly, I would have been better off just putting the cash in the money box.”

The broker has already faced questions about its relationship with Woodford Investment Management from the Treasury Committee and its chairman, Nicky Morgan MP, while others have called for changes to the rules governing broker recommendations, or for lists to be scrapped altogether.

Hargreaves has said the firm’s only financial incentive is to choose funds in the interests of its clients.

Danny Cox of the firm said: “The most important times to review your financial plans are the life stages when things change; becoming a parent, buying your first home or retiring.”

He added that the firm worked with a number of partners but had not worked with Bounty since 2011 and could not disclose any of the other partners it worked with.

Hargreaves Lansdown is profiting from disgruntled customers who want to transfer their money elsewhere, charging one Telegraph Money reader more than £2,000 in exit fees.

Britain’s biggest fund shop said it would waive its custody fees for investors in Neil Woodford’s suspended Equity Income fund, which was included in the broker’s Wealth 50 list of recommended funds. But this newspaper has also called on Hargreaves to waive its exit fee for customers who bought funds run by Mr Woodford.

The reader, who wished to remain anonymous, bought the smaller Woodford Income Focus fund on the basis of the broker’s recommendation. He lost about £2,500 from the investment and wishes to switch brokers, having “lost trust”. He and his family have £800,000 invested across a dealing account, four Isas and two self-invested personal pensions (Sipps). To move everything would cost £2,000 in exit fees.

Hargreaves charges a £30 account closure fee, plus £25 per fund and £25 for cash. “This money is meant to last me and my family the rest of my life,” said the reader, who said he intended to report the fund shop to the Financial Ombudsman Service.

The charge could be reduced if all holdings were sold and held as cash, but this would require more work and could lead him to miss out on returns while the transaction took place.

He has transferred about half to Fidelity, which offers a £500 switching bonus to new clients who have been charged an exit fee. This still leaves the family more than £1,500 out of pocket.

A spokesman for Hargreaves said: “In common with the majority of platforms we charge an administration fee to cover the costs of transfers. We are working hard with others to improve the transfer process and over time should reduce the costs.”

Number of Hargreaves Lansdown customers with exposure to the Woodford Equity Income fund