Royal Mail float frenzy crashes the website at Hargreaves
Online broker angers clients unable to make quick profit as shares rocketed
Hargreaves Lansdown, Britain’s biggest website for private investors, suffered a massive blow to its reputation yesterday on one of the busiest days in the history of online trading after its services collapsed under the weight of demand for Royal Mail shares.
The firm, with more than 500,000 small investor customers, saw its website crash and phonelines overloaded yesterday, when more than 100 million Royal Mail shares changed hands in its first hour of trading.
Royal Mail shares shot up from the float price of 330p to close their first day of conditional trading at 455p, but small investors attempting to use Hargreaves to turn their 227-share allocation into a quick profit were thwarted by its services crashing.
The DIY investing giant had been heavily promoting the Royal Mail shares float to its customers for weeks, but yesterday its site hosted an embarrassing admission of “unprecedented demand” all day, apologising to customers and asking for their patience.
That patience, however, cost money. With Royal Mail shares hitting a high of 459.75p in early trading, small investors who had sold their maximum £750 stake could have turned a £294 profit on their 227-share allocation.But by the end of the day, the share price had slipped back to 455p.
Clients took to Twitter to vent their anger at the broking giant, with one tweeting: “Hargreaves Lansdown talked up its service before the float and now all systems are down. Very bad news.”
Another wrote: “Total failure of Hargreaves Lansdown to cope this morning. Entirely foreseeable.” And one customer’s reaction to the site’s inability to trade was to quit its services, writing: “Bye bye HL.”
But the chief executive Ian Gorham claimed he had not been unprepared for the demand and said Hargreaves’ dealing lines had six times more staff than usual. “While clearly we predicted and prepared for substantial activity in Royal Mail shares, the volumes involved have gone off any conventional scale,” he said.
“We have six times the normal number of dealing staff working today, and continue to work hard to deal with the demand. We will keep working flat out until our normal fluent service is restored. We’d like to apologise to our clients for any issues they have experienced this morning.’”
Clients prevented from selling their stakes due to Hargreaves’ meltdown are already demanding compensation, with one tweeting: “Can’t sell shares on HL website, they don’t pick up the phone either… How do you claim compensation for losses?”
The firm, however, refused to confirm it would offer all affected investors their lost profit, saying: “If someone complains, we will take all customer complaints seriously and we will deal with them through the normal procedures.”
Rival brokers appeared to be relishing Hargreaves’ difficulties. TD Direct Investing said it had seen a record first hour of trading, 60 per cent of it Royal Mail shares, while Charles Stanley tweeted its trading website “experienced absolutely zero downtime this morning on the increased volume.”
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