Stockbroker sounds retreat

Alex Brummer CITY EDITOR

CLIEnTS of Hargreaves Lansdown will find it hard to forgive the stockbroker, irrespective of steps taken to make amends for the intimate relationship with defrocked guru neil Woodford.

The top brass at Hargreaves, led by chief executive Chris Hill, have magnanimously agreed to waive bonuses given that so many clients are badly affected by the cavalier way in which Woodford has looked after savings.

Hargreaves also was quick to suspend its fees for handling Woodford funds when the scandal broke.

But the loss of a year’s bonuses, worth a potential £3.6m to Hill and finance chief Philip Johnson, will not result in them ending up in a Bristol poorhouse.

As for research chief Mark Dampier, he happily will continue to landscape his garden armed with the £6m he and his family extracted in Hargreaves share sales shortly before Woodford was forced to ‘gate’ the flagship Equity Income fund.

How vulnerable Woodford’s pump and dump investment choices are to shifts in sentiment was demonstrated by the slump in the shares of legal outfit Burford Capital,

which tanked 46pc after hedge fund Muddy Waters ripped apart its model.

One of the hardest-to-forgive aspects of the Woodford fiasco is what it has revealed about cosy relationships between all the parties. Clearly, Hargreaves should never have encouraged as many as a quarter of its investors to be exposed to Woodford funds. nor should Patient Capital Trust, another of the stock picker’s funds, tamely have accepted a shameful cargo of unwanted Equity Income holdings.

Why the board of Patient Capital has been so slow to rid itself of Woodford in favour of a more trustworthy manager speaks to a feeble board run by a compliant chairman, Susan Searle.

Under-pressure Burford’s biggest investor is none other than Invesco, with 14pc. The same toxic and cosy combination of Woodford and Invesco, where the manager used to work, received a bloody nose in the summer when a bid by Dad’s Army lender nonStandard Finance for bigger rival Provident Finance was called off in the face of regulatory opposition.

Hargreaves cannot escape opprobrium for weak research, flaccid governance and unfettered greed, which has helped deliver profit margins in excess of 60pc.

The founders and executives of Hargreaves joined the ranks of Britain’s richest 0.1pc of the population on the backs of excessive fees charged to ordinary savers.

That is unforgivable.

Air time

IF YOU run an airline, the highest priorities are safety of the fleet, expertise of the engineers and the skill of the pilots.

As the business of making reservations and buying tickets has moved online, carriers’ IT has become ever more important.

Users of BA’s sites will know they can be incredibly clunky and logging in, if you have forgotten your password, can drive passengers to distraction.

The latest IT glitch at London’s leading airports, which saw 82 flights cancelled and hundreds delayed, is unacceptable. This is the third time in recent years that BA has badly let down loyal customers.

In September last year hackers injected a malicious code into a BA website, allowing them to access vital financial details contained in 380,000 transactions.

And it is not easily forgotten that in May 2017, the carrier came to a halt when an engineer disconnected the power supply.

It is something to be proud of that IAG, owner of BA, is among the most profitable world airlines, earning £2bn last year without the state subventions of Gulf carriers.

If BA, Iberia and the other IAG brands want to endure, then shareholders must recognise that investing in IT – so it is as safe as planes – is as big a priority as the next dividend payment.

Gin sling

THE idea of non-alcoholic spirit seems like an oxymoron.

But Johnnie Walker giant Diageo had enough faith in 2015 to provide venture capital to Ben Branson, who created gin tastealike Seedlip on his farm in the Chilterns.

The brand – at a hefty £28 a bottle – took off, and is available in 25 countries.

Diageo boss Ivan Menezes is a fan and the distiller has moved to fully capture the growth by taking majority control. It is not just HS2 that is stirring up the Chilterns.