Hargreaves Lansdown scraps special dividend as FCA reviews capital

Hargreaves Lansdown chief executive Chris Hill

Hargreaves Lansdown has decided not to pay a special dividend this year after the FCA said it would be reviewing the firm’s capital requirements.

In a market announcement, Hargreaves says it was told by the regulator yesterday that the FCA plans to reassess the amount the company needs to set aside in capital “given the group’s strong recent growth in scale and complexity”.

Shares dropped 6 per cent on the update.

Hargreaves’ dividend policy is based on maintaining an ordinary dividend payout at around 65 per cent, and looks to pay out excess cash to shareholders in the form of a special dividend.

But the firm says the new capital limits set by the FCA would mean its surplus for next year would not meet its risk appetite if it paid a special dividend this year.

Hargreaves says: “Reflecting this policy and our notification from the FCA yesterday, the board expects to propose a final ordinary dividend that will generate a total ordinary dividend payout ratio of 65 per cent for the financial year ended 30 June 2017.

“The board has concluded it needs to retain an additional £50m of capital and hence the group will not pay a special dividend for the financial year ended 30 June.”

The company will issue its annual results on 15 August.