Consumer Duty risks drive Hargreaves Lansdown and AJ Bell 'Sell' rating from UBS

Cyclical challenges to net new business

UBS has launched its research coverage of platform providers AJ Bell and Hargreaves Lansdown with a ‘Sell’ rating, due to perceived Consumer Duty risks.

In a research note published on Wednesday (7 November), the Swiss bank's equity research division said both firms are set to face revenue growth headwinds from cyclical challenges to net new business and market returns.  However, analysts argued that the biggest risk is to interest earned on client cash. UBS has estimated that interest earned on client cash makes up more than 80% of AJ Bell's pre-tax profit for this year, and 55% for Hargreaves Lansdown. The firm said that regulatory risk to revenue was high for both providers in light of the Financial Conduct Authority's Consumer Dut...