EMPOWERING

PEOPLE TO

SAVE AND

INVEST WITH

CONFIDENCE

Report and Financial Statements 2022

CONTENTS

Strategic report

Hargreaves Lansdown at a glance 02

Chair’s introduction 04

CEO Review 06

Strategy & KPIs 12

Market overview 18

Business model 22

Stakeholder engagement 24

People 26

Corporate citizenship 31

Performance 45

Risk management and the

principal risks and uncertainties 51

Governance

Chair’s introduction 61

Board of Directors 63

Corporate governance report 66

Audit Committee report 74

Directors’ Remuneration report 79

Nomination Committee report 107

Risk Committee report 111

Directors’ report 114

Section 172 statement 118

Statement of Directors’ responsibilities 122

Financial statements

Independent auditors’ report 124

Section 1: Results for the year 131

Section 2: Assets and liabilities 139

Section 3: Equity 147

Section 4: Consolidated statement

of cash flows 149

Section 5: Other notes 150

Section 6: Company financial statements 159

Other information

Directors, company secretary, advisers

and shareholder information 166

Five-year summary 167

Glossary of alternative financial

performance measures 168

Glossary of terms 171

Our purpose

We empower people to save and invest

with confidence. Offering a service

that supports them in building their

financial resilience and achieving the

right outcomes. We listen and respond

to the needs of our clients and other

stakeholders to evolve, grow and

prosper collectively.

Who we are

We are the UK’s largest digital wealth

management service. For over 40 years,

we have helped clients to manage their

finances through our broad and easy

to use service. Today we are trusted

with more than £123 billion by 1,737,000

clients. We are a well established, FTSE

100 company, headquartered in Bristol

employing over 2,000 people.

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Report and Financial Statements 2022

HARGREAVES LANSDOWN AT A GLANCE

OUR PURPOSE

DRIVES OUR

STRATEGY

... ACHIEVED THROUGH

OUR 5 STRATEGIC PILLARS

The delivery of our strategy will encompass the whole business,

as we optimise the way we work together to execute on the

next stage of HL’s growth. We are mobilising and monitoring

delivery and execution across five pillars of our strategy.

Create a step

change in Client

Service & Efficiency

Accelerate Growth

via our Integrated

Proposition

Develop

our Digital

Backbone

Enable our People,

Strengthening

our Culture

Scale the

Foundations

FIND OUT MORE

Pg 4: Chair’s Introduction

for the Chair’s perspective on our client

focused strategy

Pg 12: Strategy and KPIs

for further details on our Strategy and KPI’s

we will be using to measure progress and

performance against our strategic pillars

Transform the savings

and investment experience

Combine the best of

human expertise, augmented

by digital capability

Deliver a uniquely personalised

service to simply manage your

financial health and wealth

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Report and Financial Statements 2022

HARGREAVES LANSDOWN AT A GLANCE

CONTINUED

... GROUNDED IN OUR

CULTURE AND OUR 5 KEY VALUES

Over 40 years of client service means we understand the important role

we can play in building a better future for both our clients and wider society.

Our culture, values and governance ensure we keep our clients at the heart

of all we do and that we deliver this in a sustainable and responsible way.

We put the

client first

We do the

right thing

We do

it better

From the day-to-day exceptional

client experience, to the constant

improvement of our services,

we use client feedback to shape

future development.

We always aim to do the best for

our clients. We are fair, honest and

focus on the long-term. It’s why our

clients trust us, and how we earn

their loyalty.

For over 40 years, HL has

set the tone for the retail

investment market. We are

committed to energetically

innovating and improving.

We go the

extra mile

We make

it easy

We want to drive

the next evolution

in client experience.

For our clients and for each other.

We focus on driving positive

outcomes, taking every opportunity

to delight, inspire and reassure.

Savings and investments should

be easy to access, understand and

execute. We make things simple which

gives our clients confidence to make

important decisions at the right time.

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Hargreaves Lansdown

Report and Financial Statements 2022

TRANSFORMING THE SAVINGS

AND INVESTMENT EXPERIENCE

CHAIR’S INTRODUCTION

Client focused strategy

During a challenging year of global economic,

political and health adversity, HL has focused

our time and attention on two key areas: helping

clients today and building out tomorrow’s strategy

for sustainable growth and a market-leading

offering in an increasingly competitive market.

Clients have responded to better insights and

even more relevant information and services

through a strong client retention rate, improved

NPS score and a record number of clients adding

to their accounts at tax year end. Across the

country, a vast majority of investors are

challenged with how best to save and invest

during these unprecedented times. As the market

leader, a position we don’t take for granted,

we are uniquely positioned to apply our insight,

capabilities and resources to step up and

transform today’s client experience into one

where retail investors have greater access to

products, services and assistance with better

outcomes than are available in the market today.

To achieve our purpose of empowering people

to save and invest with confidence, we worked

hard this year on a strategic plan and investment

that focuses on greater efficiency, scale and

accelerated growth through engaged and skilful

leaders. Following months of detailed work by

management and challenge from the Board,

the executive team delivered its first Capital

Markets Day (“CMD”) on 22 February 2022.

The Board unanimously supports the £175 million

of strategic investment spend outlined at the

CMD as the right thing to do to drive the

business forward. This view has been reinforced

through conversations with stakeholders since

that time. The Board also worked closely with

the CEO over the past year to help him build an

exceptional management team with significant

digital and business transformation experience

to ensure the strategy is effectively delivered.

With a focused strategic direction and resources

in place to deliver it, the Board has given strong

attention to ensuring there are appropriate

governance and controls in place to oversee

the delivery of the strategy including metric

dashboards, risk oversight and regular review

of major milestones and timelines. To read more

about the strategy, please see pages 12 to 17.

Sustainable and responsible growth

ESG considerations have strengthened

considerably at HL over the past year

with progress in three key areas that align

with our legal entities:

• HL’s actions as a responsible business (PLC)

• HL’s stewardship as a responsible fund

manager (HLFM)

• HL’s offering as a responsible investment

and savings provider (HLAM)

Our vision for ESG at HL

istoinspire confidence for

asustainable, resilient, and

successful financial future.

Deanna Oppenheimer

Chair

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Report and Financial Statements 2022

Strategic report

CHAIR’S INTRODUCTION

TRANSFORMING THE SAVINGS AND INVESTMENT EXPERIENCE CONTINUED

Each of the management team has a specific

responsibility for driving our ESG strategy across

the company. Some notable achievements in the

year include:

• The launch of the Savings and Resilience

Barometer in conjunction with Oxford

Economics to give a comprehensive view

of the nation’s financial resilience.

• Improvements in our female representation,

gender pay gap, and early work on ethnic

representation.

• The first Sustainability Accounting Standards

Board (SASB) report has been completed

and published on our website.

• A new ESG investment policy has been

approved, integrated, and published on

our website.

• The launch of the HL Growth workplace

default fund with ESG integration and

exclusions in place.

We are focused on ensuring that proper ESG

integration will drive AUA, meet regulatory and

other stakeholder requirements, deliver better

client outcomes and enhance our reputation.

Board governance and changes

The Board is committed to delivering high

standards of corporate governance and

embedding the right culture and behaviour

throughout the business whilst considering our

stakeholder interests. To ensure we have the

appropriate skills and expertise to guide and

challenge the business through the next stage

of growth, we have continued to strengthen

the skill set of the Board throughout the year.

As previously announced in June 2021, with

effect from 1 September 2021, Penny James

was appointed as our new Senior Independent

Director (SID). Penny brings exceptional skills

with wide ranging financial services experience,

particularly in leading digital innovation and

transformation whilst strengthening our

Board diversity.

The Board have overseen an orderly transition

for the role of CFO. In December 2021,

we announced the appointment of Amy Stirling

as CFO with effect from 21 February 2022, taking

over from Philip Johnson who stepped down

from the Board on 31 January 2022. On behalf

of the Board, we thank Philip for his work at HL

during a strong period of growth. Amy brings

over 20 years of strategic financial management,

leadership and brand experience across a range

of industry sectors both as an executive and

non-executive. She is already bringing valuable

insights, pace and results to the business.

In June 2022, we announced the appointment

of Darren Pope to the Board as a Non-Executive

Director with effect from 1 September 2022.

Darren will bring strong skills with a broad range

of financial services and regulatory experience

and adds resiliency to the Audit Committee.

More detail of all these appointments can be

found on page 61.

Dividend

At our CMD we outlined that we would continue

our progressive ordinary dividend policy, growing

the ordinary dividend by 3% per annum for this

year and next. As such, the Board recommends

payment of a final ordinary dividend of 27.44p

per share, subject to shareholder approval at

the AGM. If approved, such dividend will be

paid on 24 October 2022 to all shareholders

on the register at the close of business on

23 September 2022.

An interim dividend of 12.26p per share was

paid on 1 April 2022. Taking this into account,

the total ordinary dividend for the year will be

39.7p per share (2021: 38.5p), an increase of

3% on last year.

Looking forward

As we look ahead, there is much uncertainty

driven by external conditions beyond our control

that could impact our revenues and earnings.

What we can control, however, is robust

governance over the execution of our recently

announced strategy and the efficient spending

of that investment by our highly experienced

management team. Whilst currently there are

headwinds across our industry, we are

committed to our purpose by driving efficiency,

resiliency, and sustainable growth for the benefit

of all stakeholders and the broader society.

As ever, on behalf of the Board, I would like to

thank all our stakeholders including our clients

who continue to save and invest with us, our

colleagues who work tirelessly to deliver for our

clients, and our shareholders for their continued

investment and support.

Deanna Oppenheimer

Chair

4 August 2022

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Report and Financial Statements 2022

Strategic report

CEO REVIEW

EMPOWERING YOU TO SAVE

AND INVEST WITH CONFIDENCE

Transforming the saving

and investing experience

This year has been a year of contrasting moods.

It was welcome to see signs of recovery from the

COVID-19 pandemic, but that sense of optimism

has been replaced by new challenges including

inflationary pressure, international conflict and a

worsening cost of living crisis that is now having

an impact on so many lives. The result is that

investor confidence has fallen significantly.

At times like these it helps that we have a

deep sense of history and draw on lessons

from our over 40-year track record of supporting

our clients through tough economic times.

HL has managed through unpredictable market

conditions throughout our history, including

several previous financial crises, political

instability and general elections, referendums

and Brexit. Our approach has been consistent:

we support our clients by providing relevant

insight, information and knowledge that both

builds confidence and ensures that investment

decisions and execution are as easy as they

can be in uncertain times. In 2022 we have had

two clear priorities: being there for our clients

throughout these turbulent market conditions

to help them achieve their financial goals;

and accelerating our ambition to transform the

saving and investing experience, where we

have set out a clear programme of strategic

investment to improve how our clients can

engage and manage their money whilst driving

growth for our shareholders.

Given the economic pressures, it is evident

that financial resilience is now a key priority

in everyone’s lives. Our purpose – to empower

people to save and invest with confidence –

has never been more essential. Clients’ needs,

which were already changing fast during the

pandemic, have continued to evolve amid the

new pressures from inflation, higher interest

rates and geopolitical uncertainty. As their

lifelong partner and with unparalleled

understanding of their financial goals that

sit alongside navigating all of the pressures

in their lives, it is critical that we now execute

our strategy to continue to drive leadership in

our sector by building the digital wealth manager

of the future. We will transform the experience

that clients encounter when they manage their

money, combining the best of human expertise

from our colleagues and augmenting it with the

supercharged use of data and technology to

deliver a uniquely personalised service that

will make managing wealth, financial health

and resilience, easier and more intuitive, with

relevant information that drives real outcomes.

This integrated way of servicing our clients,

the depth of data we can draw on, the

comprehensive and unrivalled range of products

and services in one place all underpin how we

create value for our clients. We are proud of

our track record of high quality service that has

enabled us to earn and retain the loyalty and

trust of our clients. Their continued confidence

in picking us as their financial partner is evident

in our rating as the direct-to-consumer platform

with the highest brand awareness (Platforum UK

Consumer Insights Jan 2022). We beat the high

street on a regular basis for accessing market-

leading rates on their cash – our Active Savings

service has had market leading rates for over

80% of this year. Alongside our cash offer, clients

benefit from discounted prices for popular

investment funds with an average saving of 20%

across our Wealth Short List of funds stemming

from us using our scale to deliver value for them.

They are able to do all of this using digital tools

and services that resulted in HL being rated #1

for investor experience in October 2021 by

Platforum. Our investment to evolve our strategy

means that our clients will benefit from the

creation of more value-added services, as we

expand into a broader wealth management

market, where incumbents have traditionally

been too slow to adapt to ever-changing

consumer needs.

Given the economic pressures,

it is evident that financial

resilience is now the key

priority in everyone’s lives.

Chris Hill

Chief Executive Officer

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CEO REVIEW

EMPOWERING YOU TO SAVE AND INVEST WITH CONFIDENCE CONTINUED

This market has reached an inflection point,

with new technologies enabling us to service

clients with personalisation through engaging

tools, data analytics and timely relevant nudges

in ways that were simply not possible before.

By investing to scale and further broaden our

proposition at HL, our aim is to capture a growing

proportion of the £3 trillion addressable wealth

and cash savings market in the UK and drive

the next stage of our sustainable growth.

The £175 million focused investment programme

will deliver a significant shift, allowing us to scale

in a more cost effective way, improve the client

experience and proposition and drive efficiency

through our client service. Myself, all of my

colleagues and our Board are united behind

the delivery of our strategy and confident

in the value it will deliver for both clients

and shareholders.

Performance in the year

The difficult backdrop in 2022, driven by a

combination of macroeconomic and geopolitical

events has hit markets and dented investor

confidence throughout the year. As we have

seen across the industry, this has led not only to

reduced asset values, but also to subdued flows

for many direct-to-consumer services and lower

activity across wealth management as a whole.

Through the year we delivered £5.5 billion of net

new business. I am particularly pleased that in

spite of this tough backdrop, the quality of our

service attracted a further 92,000 net new

clients, taking our total client numbers to a

record new high of 1.74 million. This compares

to FY21 where positive influences like the

COVID vaccine and subsequent recovery and

the heightened savings environment during

lockdowns led to a unique record year. As a

result, we have seen an expected reduction

in flows and client growth, which has impacted

our results for the year, with profit before tax of

£269.2 million.

Encouraging engagement is a key success metric

for us and our investment into digital tools and

our app continues to pay off with 290 million

digital visits in 2022 and an increase in mobile

engagement with 61.5% of digitally active

clients using the app (2021: 58.3%). This higher

engagement was also reflected in our flows

where a record 882,000 clients contributed to

their ISAs and pensions this tax year and net new

business per new client increased to £15,565

(2021: £13,943).

In 2022 we continued our Better Investors

programme which is aimed at building and

improving our long-term relationship with clients,

providing over 590,000 nudges to clients to raise

awareness of key insights on investment basics

such as levels of cash balance, compounding,

levels of diversification and risk and the

importance of regular investing. These nudges

continue to help us maintain high levels of client

retention at 92.1% (2021: 92.1%) whilst nudging

up our asset retention rate to 91.8% (2021: 91.4%).

In recent years we have seen clients diversifying

their portfolios, increasing their weightings to the

US, China and particularly technology stocks and

the NASDAQ. Having reached a record AUA of

£141.2 billion at 31 December 2021, the second

half of our financial year to 30 June 2022 has

seen significant market turbulence with the FTSE

All Share down 6.3%, the S&P 500 down 20.6%

and the NASDAQ down 29.5%. This negative

impact has more than offset the net new

business flows resulting in AUA at the end of the

financial year at £123.8 billion (2021: £135.5bn).

Despite this impact we delivered a robust

revenue performance of £583.0 million (FY21:

£631.0m), underpinned by our diversified revenue

streams. Although asset related revenues and

share dealing volumes have been impacted,

the recent rises in interest rates to 1.25% at the

year end have provided a positive tailwind for

cash revenue, which will continue into FY23.

The rising interest rate environment was also

reflected in the enhanced performance of our

Active Savings service, where assets hit a record

£4.6 billion with over 114,000 client accounts.

Delivering our strategy and executing on our

key initiatives will require £175 million of strategic

spend between now and FY26. In the first year

we have incurred £25.7 million of Investment

Cost (including £4.6m of spend which has been

capitalised) and £7.2 million of dual technology

running costs resulting in £313.0 million of

statutory operating cost and delivering a

statutory profit before tax of £269.2 million

(2021: £366.0m). We are committed to

disciplined investment with a focus on cost

control across the business. In the period,

underlying operating costs were £284.7

million,

up 7% vs prior year reflecting c3% of wage

inflation and the annualisation of growth in

people and capability to support and develop

the 92,000 new clients added. This has resulted

in underlying profit before tax of £297.5

million

(2021: £366.0m).

590,000+

nudges to clients to raise

awareness of key insights

on investment basics

such as levels of cash

balance, compounding,

diversification, risk

and importance of

regular saving.

92,000

net new clients added in

the year taking our total

clients to 1.74 million.

61.5%

of digitally active clients

use our mobile app.

1 Underlying operating costs and underlying profit before

tax are new alternative financial performance measures

and are defined on page 168.

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CEO REVIEW

EMPOWERING YOU TO SAVE AND INVEST WITH CONFIDENCE CONTINUED

In January this year, in

partnership with Oxford

Economics, we launched

the first edition of the Savings

and Resilience Barometer,

a tool designed to provide

a holistic view of the state

of the nation’s finances.

Our strategy

We announced the evolution of our strategy in

February at our Capital Markets Day as we invest

to transform, combine and deliver the next phase

of wealth management. Over the past year,

I have built a highly experienced and capable

Executive team that understand what it takes to

deliver a digital transformation at scale and the

transition that HL must undertake to become the

digital wealth management service of the future

and change how people manage their money.

The execution of this strategy is underway

and being delivered through five key pillars:

• Accelerate Growth via our Integrated

Proposition

• Create a step-change in Client Service

and Efficiency

• Develop our Digital Backbone

• Enable our People, Strengthening our Culture

• Scale the Foundations

We are focused on delivery and driving success

through disciplined investment that drives clear

benefits for clients and shareholders and have

made a great start against each of these pillars

in 2022.

Accelerate Growth via

our Integrated Proposition

As client needs continue to evolve, we must

continue to update our own proposition hand

in hand to unlock the next stage of our growth.

At our Capital Markets Day, we outlined plans to

expand our investment solutions, improving the

range of investment options we provide to clients

at all stages of their investment journey from

beginners to highly experienced investors.

Through launching a combination of new funds

and investment solutions, HL will have the

investment choices to address a broad range

of client needs.

It is also clear that increasing interest rates

and volatile markets highlight the importance of

diversified portfolios and accelerate the growth

of Active Savings, which allows us to help clients

in a more effective and time efficient way.

Finally, as a direct-to-consumer service, we know

that we must offer clients the tools they need to

manage their own investments, but we also know

that, at important stages and at moments that

matter, focused guidance and advice can be key

to building confidence and delivering the right

outcomes. Therefore, we are going to launch a

new digital, human and advice service that will

complement the significant support and

engagement we already offer our clients.

• Investment solutions – We launched the HL

Growth Fund as the default multi-asset fund for

the SIPP in December 2021, integrating into key

Workplace journeys from April. We have seen

encouraging levels of engagement from clients

with £102 million assets under management

by the end of the financial year and high levels

of opt-in. We have continued to expand our

capabilities and have made new hires into the

fund management team.

We expanded our research coverage to

Exchange Traded Funds, providing regular

updates on client’s most popular investment

trust holdings, and appointed a dedicated

ESG team providing increased education and

analysis with 60% more articles, increased

engagement and an increase in the number

of responsible funds on the Wealth Shortlist.

ESG is now a separate and distinct feature

of all research that we produce.

41%

of households are dipping

into reserves or debt to

tread water. Source: HL’s

Savings and Resilience

Barometer Report for

Great Britain, July 2022.

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• Active Savings – We added two new partner

banks, including Santander International, taking

the number of partner banks to 15. Across the

year we have seen £1.5 billion of net inflows

with AUA now at £4.6 billion and 114,000

client accounts. The increases in interest rates

through the second half of the year along with

strategic marketing spend, however, has seen

a step up in net flows with £0.7 billion added

in the last quarter. This diversified proposition

not only drives client and asset retention,

but importantly in a rising rates environment

has also been a driver of new client wins.

• Augmented Advice – Over the year we have

made significant progress with our Augmented

Advice offering, scoping, designing and building

key features, informed by significant client

testing. Our Augmented Advice proposition will

establish a brand new experience for clients,

incorporating insightful tools like financial

wellbeing dashboards and calculators with

nudges and coaching to provide an enhanced

level of insight that supports them in hitting

their financial goals. We have made an

experienced hire to lead both this initiative

and our face to face advice business.

As we look ahead to 2023, our focus will be

on key deliverables across the three streams:

we will be launching new funds and developing

investment solutions, starting with a US fund

launch in Q2 of our financial year (subject

to regulatory approval); we will build on the

momentum that we have seen in Active Savings

with a continued focus on that product; and

we will launch a pilot for our augmented advice

service at the end of H1.

Create a step change in

Client Service & Efficiency

HL has always been known for its high quality

client service. Maintaining and evolving this

to deliver a future proofed client experience

underpinned by scalable and cost-efficient

processes is fundamental to our strategy

and critical to our future success. In 2022

we continued to evolve our service, driving

improvements to the client experience,

highlighted by our Trust Pilot score which

is now rated ‘excellent’. We continue to strive

for further progress and have focused on:

• Enhancing the quality of engagement –

By ensuring our service becomes ever more

personalised, we believe we will continue to

improve client engagement. In July we started

the roll-out of a Cloud Contact Centre platform

through our partner Amazon Connect. This

offers a simple to use platform for our client

service teams to improve the way they serve

our clients and reduce time taken to answer

queries. Connect allows us to simplify our

operating model, evolving client servicing so

we can use our talented colleagues to focus

on delivering an experience that adds value to

the client, one that is actioned by data insight

and through automating experiences that our

clients expect to be self-serve. It is the first

step in delivering a more personalised client

experience in a more efficient way and will

ensure improved levels of Client Satisfaction

and NPS and also reduced cost to service.

The platform will continue to be enhanced

through 2023, delivering cost savings and

service improvements by the second half

of the year.

• Building simplicity & resilience – We want to

offer a simpler and more consistent service

underpinned by technology solutions that make

it easy for us and clients. In 2022 we partnered

with Ecospend to provide ‘Pay by Bank’

services, utilising the latest technology in Open

Banking to create a more efficient and effective

payment journey option for our clients. This will

create greater resilience in our service and

deliver significant cost saving over 2023

as we roll it out across our client journeys

and applications.

We have also undertaken a project to digitise

our inbound mail processes. Using third-party

providers we have completed the first two

phases of this work, focusing on new business

applications and workflow. This work will lead

to a reduction in cost to serve, allowing us

to service more clients without extra costs,

and strengthening our ability to scale whilst

maintaining resilience. It will also act as a key

strategic enabler for workflow automation

and the delivery of our wider service strategy.

• Driving innovation – HL has a long history of

innovating: we lead the market in delivering

new solutions to enhance the saving and

investing experience for clients and 2022 has

continued this trend. In May we launched REX,

a new Retail Offer Service with Peel Hunt,

enabling retail investors to access IPOs and

secondary fundraising, a key area where

retail investors previously lacked the tools

to engage. The first corporate action was for

an infrastructure investment trust and 25% of

the shareholders participated. This continues

to broaden the service we offer our clients,

providing greater functionality and increasing

client satisfaction.

Our key focus for 2023 in service and efficiency

will be on delivering across each of these areas

to enhance the quality of our client engagement

and deliver on cost savings outlined at our

Capital Markets Day.

35.9%

of households have more

than 6 months’ worth

of essential expenditure,

of which half have gone

on to invest to make

more of their money.

Source HL’s Savings and

Resilience Barometer

Report for Great Britain,

July 2022.

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Develop our Digital Backbone

We have set out the ambition to be the leading

digital wealth management service and transform

how people manage their money. By investing

in more digital capabilities – from data analytics,

using cloud for scale and innovation, and better

managing end-to-end client journeys – we will be

able to continue to take advantage of our growth

and the scale of our platform reducing cost to

serve and creating operating leverage, using the

infinite scalability of the cloud.

Enhancing our digital capability underpins all of

our success and drives the execution of all of our

strategic pillars. In 2022 we have delivered on

some key foundational outcomes that underpin

our digital backbone:

• Cloud & Platform – We need to leverage a

cloud-based flexible infrastructure to build

systems that auto-scale and increase our

ability to innovate enabling us to partner

with companies that are pioneering the

latest technology. In 2022 we have set out

foundations for our cloud migration, signing

contracts with industry leaders ForgeRock and

Kong to support our development of enhanced

identity and authentication solutions and

building our ability to scale. We have also

begun to apply cloud-based solutions through

partnerships including Amazon Web Services,

who are supporting the delivery of our new

cloud and data platforms, building increased

personalisation and efficiency into our service.

• Data – We have an unparalleled insight into

client behaviour and needs built up over 40

years of lifelong relationships. We must be

able to use this data to provide the highest

quality of client service and personalise the

experience for both clients and colleagues.

We are focused on data enrichment to build

the foundations that enable a smoother

transition to the cloud and to power augmented

solutions. This year we have partnered with

Precisely, to prepare our data for the future

and enable us to manage and govern across

its life cycle, identifying and cataloguing

data assets as well as improving data quality

through rules and workflows that then power

AI driven guidance.

• Digital Foundations –These enable us to

deliver an end-to-end digital client experience

at pace, and key to this is ensuring that HL’s

transformation is client-product and client-

journey led. In 2022 we have realigned our

digital teams in a single organisation under

our Chief Digital and Information Officer and

created a stream-lined product led organisation

under our Chief Technology Officer. One key

element of the product led approach is to

ensure consistency between online and mobile

journeys – in 2022 we have focused on this,

including adding previously non-mobile

functionality such as fund switching so it is

available across all devices and improving our

mobile app to increase accessibility. We have

also utilised product led teams to deliver

improvements across other strategic pillars,

including the digitisation of our mail room

and the launch of the Retail Exchange service.

The launch of a new design system has

increased the pace of our developers through

an ability to create consistent user experience.

Across each of these initiatives we are seeing

delivery at pace and achieving outcomes

that significantly enhance the client and

colleague experience.

Our Digital Transformation is focused on delivery

and our execution plan is broken into clearly

identified and achievable projects, where we

can deliver at pace and see tangible cumulative

benefit. Our focus in 2023 will be on utilising the

ForgeRock and Kong partnerships to centralise

digital identity to create a market leading

experience; and we will increase our ability to

execute multivariant releases. These are key

elements that complement and support a data

driven, product led way of working. Alongside

this we will also continue our cloud journey,

delivering significant internal and external tools

through our partnership with AWS.

Enable our People,

Strengthening our Culture

The delivery of a strategy is only possible

with the right people, capabilities and culture

underpinning it. HL’s success is due to our

brilliant colleagues and their continued efforts to

go the extra mile, innovate and deliver for clients.

The execution of our strategy will be reliant on

introducing key new capabilities in some areas

and so we are focused on building the right

environment to develop and enhance colleague

performance, retain and attract the right talent

and make HL a great place to work. In 2022 we

have adapted to the post-pandemic environment

by building a hybrid working pattern that is

colleague led and enabling our offices for new

working patterns. We have also been focused on

supporting colleagues through the challenging

conditions impacting all of us and in May

provided a ‘breathing space’ payment for

colleagues to aid with their cost of living needs.

We continue to look at solutions to provide

colleagues with support during this time.

Looking ahead to 2023 we continue to onboard

the new capability to support our strategy

whilst also focusing on developing and enabling

colleagues to adopt agile and product led ways

of working, supporting HL’s ability to deliver client

outcomes and change at pace.

HL has a long history of

innovating; we lead the market

– driving new solutions to

enhance the client experience.

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Report and Financial Statements 2022

Strategic report

CEO REVIEW

EMPOWERING YOU TO SAVE AND INVEST WITH CONFIDENCE CONTINUED

Scale the Foundations

A critical element of any successful business

is the enabling functions that support the

delivery and execution of the strategy. To drive

sustainable returns over the long-term we must

ensure we strengthen our foundations to ensure

both resilient client journeys and support growth

and new ways of working. In 2022 we have done

this through welcoming new capability across

key teams including a significant increase in

Risk and Compliance. We have also delivered

key resilience and scalability improvements to

key systems including our Drawdown payments

and commercial banking systems. In 2023 we

will continue to prioritise this enhancement of

foundations in parallel to our work to build new

functionality, ensuring that we have the systems

and people to deliver our strategy. We must also

meet regulatory expectations including delivering

in line with the new Consumer Duty to help

ensure the right outcomes for clients.

It is clear that HL is in execution mode. In 2022

we have set the foundations for the successful

delivery of our strategy. We are confident that

we have the right strategy and the right team to

deliver and now we are seeing the results. I look

forward to sharing more of these as we transform

our business over the coming years.

FY23 Guidance and medium-term outlook

We are currently seeing, and for the period

ahead expect to see continued, economic

and geopolitical turbulence. This will continue

to impact key drivers of our business including

asset levels and investor confidence. We have

supported clients through such events and

period for many years and each time we have

come through stronger. This time will be

no different.

The strategy we outlined in February 2022 will

deliver outstanding client service, strong growth

and returns and continued market leadership for

HL. We are therefore confident that execution of

this strategy by the highly experienced team we

have assembled will deliver the metrics and

targets we set out at our investor day.

Our visibility on whether the timing of delivery

of our targets has been impacted will be

influenced by when we have greater visibility

on normalisation in markets and related investor

confidence as we outlined at the time of the

CMD. We will keep you updated as we execute.

In the meantime, to position ourselves to benefit

as markets do normalise, we are focusing on

factors we can control including the execution

of the strategy. In this context we have set out

expectations for FY23 as follows:

• Revenue margin of between 44 and 47 basis

points primarily reflecting the higher revenue

margin on cash resulting from higher

interest rates.

• Underlying cost growth of between 9.5% and

11.5%. This is on the back of lower than guided

cost growth in 2022 and will, in absolute terms,

still be lower than costs guided to at the time

of the Capital Markets Day. It also reflects

c£15 million of cost savings.

• £65-75 million of strategic spend with no

change to our overall strategic spend to the end

of 2026 of £175 million and £20 million of dual

tech running costs as previously guided to at

the Capital Markets Day. This investment will be

funded through £55 million of annual recurring

cost savings delivered over the period.

• 3% Ordinary dividend growth.

Finally, I would like to thank my colleagues once

again for their hard work and energy through yet

another difficult period where they have ensured

that we have provided a market leading service

to an ever-growing number of clients. I also

want to thank our clients for their continued

engagement and enthusiasm as we develop our

proposition and service through such difficult

times. Our goal is to continue to enhance their

financial resilience and transform how they

manage their money.

Chris Hill

Chief Executive Officer

4 August 2022

HL’s success is due to our

brilliant colleagues and their

continued efforts to go the

extra mile.

Governance Financial statements Other information

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Report and Financial Statements 2022

Strategic report

STRATEGY & KPIS

DELIVERING

OUR STRATEGIC

PRIORITIES

Our client focused strategy and

culture enables us to build long-term

relationships and address the structural

growth opportunities that exist.

We are investing across the 5 pillars of our

strategy to deliver the next generation of wealth

management, driving sustainable returns and

a high quality client experience.

We are committed to ensuring our investment

drives significant returns. Therefore to monitor

delivery across each of our strategic building

blocks we have allocated relevant key

performance indicators. We have established

regular monitoring of these metrics across

committees and our plc Board to ensure progress

is made effectively.

1 2

Create a step change in

Client Service & Efficiency

Accelerate Growth via

our Integrated Proposition

We are using digital technology and data to

deliver tailored, seamless client journeys to

improve client experience and enhance client

outcomes, whilst delivering scalability and

cost-efficiency.

We are strengthening our core proposition

by investing in our Investment Solutions,

accelerating our Active Savings service and

launching our new Augmented Advice and

Guidance capabilities. These will all help to drive

client acquisition, increase ongoing engagement

and improve retention rates.

3 4

Develop our

Digital Backbone

Enable our People,

Strengthening our Culture

By investing in our digital capabilities –

from data analytics, to transferring data to the

cloud, and better managing basic end-to-end

client journeys – we will be able to continue

to take advantage of growth and scale

our platform in a more cost-efficient way,

reducing our cost to serve and creating

operating leverage.

We are simplifying the organisation to drive faster

decision making and clear accountability. Focusing

on enhancing our colleague value proposition and

strengthening our ways of working and culture.

Scale the

Foundations

Strengthening operational resilience and risk

management to ensure resilient client journeys

whilst further developing our enabling functions

to support growth and new ways of working.

Governance Financial statements Other information

Strategic report

Hargreaves Lansdown

Report and Financial Statements 2022

STRATEGY & KPIS

DELIVERING OUR STRATEGIC PRIORITIES CONTINUED

Create a step change

in Client Service

& Efficiency

We have always been

recognised for our

high-quality client service

and experience – helping and

supporting clients to save

and invest with confidence.

We have a clear strategy for how we will

continue to evolve our service moving forward,

using digital technology and data to deliver

tailored, seamless client journeys to improve

client experience and enhance client outcomes,

whilst delivering scalability and cost-efficiency.

We want to make it easy for clients to manage

their investments and to provide a service that

enables them to do it better and deliver their

financial goals.

Progress in 2022

In 2022 we have continued to drive

improvements across our service and in line

with this clear strategy:

• We have partnered with Amazon Web

Services to roll out a Cloud Contact Centre,

making it easier for clients to use our

service and colleagues to provide a

personalised experience.

• We have significantly improved our

transfer performance and associated client

experience – driving average pension transfer

times from 43.3 days in 2021 to 21.2 days

in 2022 and driving improvement in the

experience and efficiency across all products.

• We have reached a record TrustPilot score,

hitting an ‘Excellent’ rating score at 4.3, a

significant increase over the year (2021: 3.7).

• We have partnered with EcoSpend to provide

‘Pay by Bank’ services, leveraging the latest

open banking technology to offer a direct

and efficient way to pay directly on to your

HL account from your bank.

Focus for 2023

• Launch our new Cloud Contact Centre,

improving the client experience and the value

that our knowledgeable colleagues can add

to every interaction.

• Launch open banking payments across key

journeys and applications.

• Deliver cost savings and increased efficiency

as outlined at our Capital Markets Day.

KPI: Client Satisfaction

Based on the average results of client feedback

in the quarterly client satisfaction surveys

in 2022.

Why

This provides a measure of our clients overall

satisfaction with our service performance.

A high score will have a positive effect,

reinforcing the long-term relationships

we build with our clients.

Progress for the year

• Over the year we have delivered significant

improvement across service measures

including improved transfer times and

reduced complaints.

• Over the year our Helpdesk have taken

1.269 million calls (2021: 1.341 million) and

416,000 emails (2021: 489,000).

• We won the award for Boring Money Best

Customer Service 2022 and were rated Gold

for our Customer Service by The Times

Money Mentor.

Result

80.7 (2021: 79.3)

Principal Risk

Strategic and operational

Governance Financial statements Other information

Hargreaves Lansdown

Report and Financial Statements 2022

Strategic report

STRATEGY & KPIS

DELIVERING OUR STRATEGIC PRIORITIES CONTINUED

Accelerate Growth

via our Integrated

Proposition

We have a broad and

extensive proposition of

investment and savings

products to support our

clients throughout their

financial lives.

Through our focused investment we will

strengthen our core proposition by expanding

our Investment Solutions, accelerating our

Active Savings service and launching our new

Augmented Advice & Guidance capabilities.

These will help drive client acquisition, increase

ongoing engagement, improve retention rates

and deliver greater net new business.

Progress in 2022

• HL Funds – In January we launched the first

of the new HL funds we plan to deliver. This

HL Growth Fund acts as the default fund for

clients of our Workplace Solutions SIPP and

by June had grown to £102 million. The new

HL Fund capabilities and suite of solutions

will provide a wide range of cost competitive

choices, tailored for investor experience and

investment objectives.

• Advice – At our Capital Markets Day we

announced our plans to launch a new

omni-channel advice proposition that

combines the best of human interaction

and our 40 years of insight into clients’

needs, augmented by better data analytics

and digital capabilities to provide a

game-changing proposition. We have

designed and built the key features of this

product, with technical delivery on track for

pilot launch at the end of calendar year 2022.

• Our Active Savings service is a critical part

of our diversified proposition. As interest

rates have risen in 2022 we have seen this

proposition continue to grow – hitting

£4.6 billion assets and 114,000 client

accounts. Over the year we have had at least

one market leading rate on platform for 86%

of the time and welcomed new banks such

as Santander International and Allica.

Focus for 2023

• Launch the pilot for our augmented advice

service at the end of H1, providing clients

with the next level of support with their

investment journey.

• Continue to build momentum in Active

Savings given the favourable interest rate

environment.

• Launch next tranche of HL Funds, starting

with the US fund – due in the second

quarter of our financial year (subject to

regulatory approval).

KPI: Net New Business

Represents subscriptions, cash receipts,

cash and stock transfers in, less withdrawals

and assets transferred out.

Why

NNB is an indicator of the trust and security

clients place in Hargreaves Lansdown along

with the perceived value of the client offering.

The greater the assets gathered, the greater

the revenue.

Progress for the year

• Challenging external conditions have

impacted investor confidence and led to

subdued net new business performance

in 2022.

• Despite this our strong proposition continues

to be recognised with HL winning Best ISA,

Best Buy LISA and Best Buy Pension at the

2022 Boring Money Awards.

• We continue to see many clients establish

regular savings into their HL accounts with

292,000 unique regular savers in FY22

(2021: 283,000).

Result

£5.5BN (2021: £8.7bn)

Principal Risk

Strategic and operational

KPI: Total Clients

Represents the total number of active clients

that are using our service by the end of the

year (unique number of clients holding at least

one account with a value over £100 at the

year end).

Why

As we attract, engage and retain a higher

volume of clients we build increased potential

for growing future AUA.

Progress for the year

• Challenging conditions impacted new client

acquisition but we still attracted 92,000 net

new clients over the period.

• Significant marketing and advertising in the

second half of the year including our third

brand awareness campaign building on the

success of previous years and underpinning

our position as the most recognised

D2C brand.

• New clients added across our range of

accounts and across all demographic

segments.

Result

1.74M (2021: 1.65m)

Principal Risk

Strategic and operational

Governance Financial statements Other information

Hargreaves Lansdown

Report and Financial Statements 2022

Strategic report

STRATEGY & KPIS

DELIVERING OUR STRATEGIC PRIORITIES CONTINUED

Develop

our Digital

Backbone

As a leading digital wealth

management service our

technology and the client

experience we deliver is

critical. We are committed

to improving our digital

capability to optimise our

service, enhance our

proposition and improve

our efficiency.

By investing in more digital capabilities –

from data analytics, to transferring data to the

cloud, and better managing end-to-end client

journeys – we will be able to continue to take

advantage of our growth and further scale our

platform, reducing cost to serve and creating

operating leverage.

Progress in 2022

• We have set out foundations for our cloud

migration, signing contracts with industry

leaders ForgeRock and Kong to support

our development of enhanced identity and

authentication solutions and our ability

to scale.

• We are focused on data enrichment to build the

foundations to enable a smoother transition to

the cloud and to power augmented solutions.

We have partnered with Precisely in 2022

to deliver a data governance tool which will

support us in achieving this.

• Launched a new Flare design system

which will support us in quicker product

development through offering a design tool

which enables consistent user experiences.

• We added features to our Mobile App

including offering functionality that was

previously only available via our website,

like fund switching. We have also increased

accessibility to the app, both by improving

our log-in process for those that require

two factor authentication and improving

integration with 3rd party support tools

like screen readers.

Focus for 2023

• Digital identity to move to the ForgeRock

cloud, enabling the modernisation of

on-boarding and critical data management

around identity. This will allow us to

personalise for our clients, offer them new

products and help power augmented advice.

• The ability to provide multivariant releases

to offer products much faster and based

on user behaviour in a safe and secure way.

• Our partnership with Amazon Web Services

will see major releases of internal and

external tools, providing us with greater

resilience and scalability and allowing all

of our teams to move faster to solve client

and colleague needs.

KPI: Strategic Delivery

Represents the progress we have made

with our strategic goals.

Why

Delivery of our strategy is critical to ensure

we continue to deliver sustainable growth

into the future.

Progress for the year

• We successfully delivered our 2022 Capital

Markets Day outlining our plans and focused

investment to the market, gaining supportive

feedback from major investors.

• Execution underway with transformation

office and processes established, plans for

change to product led organisation outlined

and target operating model in development.

• Executive team in place and aligned behind

this plan.

Principal Risk

Strategic and operational

KPI: Client Retention

Based on the monthly retained number of

clients, as a percentage of the opening months’

clients and averaging for the year. A lost client

is deemed as one who falls below a holding

of £100.

Why

A high client retention rate is a sign that clients

are happy with the service we provide and that

it fulfils their investment needs. The longer a

client is with Hargreaves Lansdown, the more

assets they are likely to accumulate.

Progress for the year

• This year we have maintained our retention

rate as clients continue to see HL as their

lifelong partner and consolidate their assets

with our service.

• We have also enhanced our support and

guidance, launching the new HL Podcast

and continuing our Better Investors

campaign where we have used data to

identify clients who may need more help

with investment basics like diversification

and risk management.

• HL won the award for UK D2C Best Investor

Experience from Platforum, with our strong

experience continuing to encourage clients

to use our digital channels.

Result

92.1% (2021: 92.1%)

Principal Risk

Operational and financial

Governance Financial statements Other information

Hargreaves Lansdown

Report and Financial Statements 2022

Strategic report

STRATEGY & KPIS

DELIVERING OUR STRATEGIC PRIORITIES CONTINUED

Enable our People

Strengthening

our Culture

Our people are our biggest

asset and are fundamental

to delivering our vision, our

strategy and the sustainable

growth of our business.

As part of our strategy we have clearly defined

how we need to evolve to better enable our

people and strengthen our culture. We will

simplify the organisation to drive faster decision

making and clear accountability, focusing on

enhancing our colleague value proposition and

strengthening our ways of working and culture.

Progress in 2022

• We have undertaken the transition of

colleagues from pandemic ways of working,

taking the best of the flexible working

practices welcomed during COVID-19 and

optimising our offices to welcome colleagues

back to regular in-person working.

• We have increased resources that support

the HL Way. The HL Way makes clear what

we represent, acting as both an internal

commitment to a standard of behaviour,

but also a public declaration of our values,

principles and beliefs.

• We have focused on supporting colleagues

through the challenging external conditions

faced in 2022 with a ‘breathing space’

payment paid to help colleagues manage

the increasing cost of living.

• Delivered key hires to increase our capability

across key areas of our strategy including

Advice, Investment and Risk Management.

Focus for 2023

• To improve delivery and efficiency across

the business we will adopt product led ways

of working and update our target operating

model to reflect this.

• We will encourage a colleague led

continuous personal improvement approach

to development.

• We will continue to find and on-board new

capability in key areas to support the delivery

of our strategy.

KPI: Colleague Engagement

Our annual colleague survey provides visibility

on colleague views and sentiment on our

business. Colleague engagement is a key score

based on four core metrics assessing colleague

pride, advocacy, motivation to go the extra mile

and intent to remain at HL.

Why

We believe it is important to listen to and

understand our colleagues’ views and

motivation; their honest feedback is crucial

in evolving our colleague engagement

programme and colleague value proposition.

Progress for the year

• Our colleague survey saw a strong response

rate at 73% (2021: 70%).

• Over the year we used colleague feedback

and engagement insight to inform decision

making around a number of projects.

• Examples include our return to office and

future of work where colleague insight helped

us enable our flexible working practices.

As well as our strategy communications,

where we have used feedback to understand

what colleagues want to learn more about.

Result

64% (2021: 66%)

Principal Risk

Strategic, operational

Governance Financial statements Other information

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Report and Financial Statements 2022

Strategic report

STRATEGY & KPIS

DELIVERING OUR STRATEGIC PRIORITIES CONTINUED

Scale the

Foundations

A critical element of any

successful business is the

enabling functions that

support the delivery and

execution of the strategy.

To drive sustainable returns over the long-term

we must ensure we strengthen operational

resilience and risk management to ensure

resilient client journeys whilst further

developing our enabling functions to support

growth and new ways of working.

Progress in 2022

Over 2022 we have been focused on

strengthening our capability across our

enabling functions to ensure we are best

placed to deliver our strategy, this included:

• Enhancing our Risk and Compliance teams

to ensure we have the right structure and

team to provide strong and scalable 2nd line

expertise and insight.

• Driving operational resilience improvements

across business critical systems in line with

regulatory time frame.

• Implementing the Business Priorities

Committee to ensure effective prioritisation

of risk focused initiatives and the

strengthening of our control environment.

Focus for 2023

• We will execute key regulatory change

including Consumer Duty.

• We will continue to update key systems

to enhance our operational resilience

and scalability.

• We will further develop our enabling functions

to support growth and new ways of working.

KPI: Statutory Profit Before Tax

Profit generated by the business over

the period. In light of our strategic spend

announced in 2022 we are now reporting

Profit Before Tax in two ways; underlying

– measuring the underlying performance

of the business excluding strategic spend,

statutory – measuring the overall business

performance including strategic spending.

Underlying PBT is defined in the Glossary of

Alternative Financial Performance Measures

on page 168.

Why

A scalable platform with strong operational

resilience, risk management and enabling

functions helps to gather and retain assets

and clients which drives revenues and profits.

Progress for the year

• PBT on an underlying basis reduced 19%

to £297.5 million in the period, driven by

reduced revenue given the supranormal

pandemic driven activity and flows in 2021

and the challenging conditions faced in 2022.

• PBT on a statutory basis reduced 26% to

£269.2 million. As outlined at our Capital

Markets Day we intend to invest £175 million

by 2026. This expenditure will generate

significant growth over the medium term

but has impacted PBT in 2022.

Result

£269.2M (2021: £366.0m)

Principal Risk

Strategic, operational and financial

Governance Financial statements Other information

Hargreaves Lansdown

Report and Financial Statements 2022

Strategic report

AN ATTRACTIVE MARKET

AT AN INFLECTION POINT

MARKET OVERVIEW

Wealth management is

experiencing structural growth

and has reached an inflection

point. Our market leading

proposition and service means

we are well placed to disrupt.

An attractive market

The UK savings and investment market has

seen significant growth in recent years and our

addressable market is estimated at £3 trillion.

Within this we operate as the leading direct-to-

consumer (D2C) UK platform with a 41.7% share

of a market worth £289 billion. Despite current

challenges, the structural factors at play along

with an acceleration of existing trends resulting

from COVID-19, look set to provide growth for

many years to come and as the UK’s leading

digital wealth manager we have a great

opportunity to win in this growing market.

Our addressable market today is made up of

an estimated £1.4 trillion of private wealth plus

£1.6 trillion of cash savings giving an implied

market share for Hargreaves Lansdown of

c4.1%. Outside the D2C space, the bulk of this

addressable market is held through independent

financial advisers, independent wealth managers

and vertically integrated firms. A significant

amount of this investment pool will have been

initially advised upon, maybe many years ago, but

now receives no ongoing advice and little support.

This provides a deep source of potential transfers

to Hargreaves Lansdown as clients look to

consolidate their investments onto our platform.

This £1.4 trillion is concentrated across around

7 million people with £100,000 or more of

investments (source: ONS). However, more

and more people are beginning to invest thanks

to the various structural drivers, with COVID-19

accelerating this trend. In addition, pension

auto-enrolment in the UK has revolutionised

saving, with over 1.6 million employers and

more than 10 million employees now participating

in the programme.

The size of the market opportunity has never

been this significant. The impact of the structural

and secular shifts will drive the market from

the £3 trillion seen today to £4 trillion by 2026.

As the market leading digital wealth management

service HL is well placed to drive significant

growth from this evolution.

Structural growth drivers and

secular shifts will significantly

grow our addressable market

in the coming years.

£4.0tn

Addressable

market in 2026

£3.0tn

Addressable

market today

£123bn

Market addressed

by HL today

Governance Financial statements Other information

Strategic report

Hargreaves Lansdown

Report and Financial Statements 2022

MARKET OVERVIEW

AN ATTRACTIVE MARKET AT AN INFLECTION POINT CONTINUED

Secular shifts

People need help understand their finances,

manage them in the right ways for them and to

do so simply and increasingly through digital means.

People are

living longer

Ongoing low

asset yields

Political & market

uncertainty

Complex savings

environment

Individual

responsibility

There is an estimated

£314 billion gap between

retirement expectations and

the cost of funding such

expectations – ‘The Savings

Gap’. The level of funding

necessary to provide retirement

income is increasing, driven by

longer life expectancies, less

generous company pensions

and ambitious retirement

expectations.

Since the financial crisis the

interest rate environment in the

UK has been low, driving down

yields on cash based products

and increasing the demand for

investing as individuals look

for an opportunity to capture

increased returns.

Political and market uncertainty

reinforces the importance of

saving and investing and the

need for individuals and families

to be financially resilient.

This drives engagement

as individuals realise the

importance of being financially

prepared for the future.

Successive UK governments

implementing further changes

to pension savings, the

introduction of various ISA

products, the growing

awareness of responsible

investing, historically low

but rising interest rates and

significant cost inflation have

made finding the right solution

for individuals’ investment

needs ever more complex.

The burden of responsibility

for retirement is shifting from

government and corporates

to the individual. This gap

cannot be closed without

individuals taking ownership for

self-provision and without the

use of long-term investments

alongside cash savings.

Hargreaves Lansdown and the

rest of the UK Savings industry

needs to help bridge this gap.

Governance Financial statements Other information

Hargreaves Lansdown

Report and Financial Statements 2022

Strategic report

MARKET OVERVIEW

AN ATTRACTIVE MARKET AT AN INFLECTION POINT CONTINUED

Inflection Point

It is through our market leading position and

deep understanding of clients and their needs,

that we recognise the wealth management

market has hit an inflection point. It is clear

that there is a strong opportunity to disrupt

the existing, fast growing market and drive

the next generation of wealth management,

and that HL is well placed to execute on this.

Over our 40 years of experience we have

built innovative investment tools, pioneering

new products and services like Active Savings

and the Stocks & Shares Lifetime ISA and

introduced high quality digital experiences

through our award winning mobile app.

This ongoing innovation and development

has driven breadth of offering and an evolving

range of products for our clients. This strong

track record underpins our confidence in our

ability to capture the market opportunity.

Our Proposition

Our proposition and service is designed to

help clients of all ages from seasoned investors

to those starting out.

ISAs

We have developed a suite of ISA products

to support clients through a variety of savings

goals. The current ISA allowance of £20,000

provides great scope for tax efficient investing.

The Stocks & Shares ISA is increasingly becoming

a long-term investment plan for many and hence

provides a significant opportunity for new

business flows.

The Lifetime ISA (LISA), launched in April 2017,

is open to those aged 18 to 40 and can be used

towards a deposit on a first home or towards

saving for retirement. As at 30 June 2022,

we have over 108,000 accounts with £1 billion

of invested assets, which probably makes us

the largest provider of LISAs. This is also the

case with the Junior ISA (JISA), which since

The Wealth Management Market has hit an Inflection point

Clients

Client expectations of how they manage

and interact with their savings and investments

are changing and have been accelerated by

COVID-19. They no longer compare just to

other wealth managers or financial services

companies, but to the client experience offered

by the likes of Amazon. Hargreaves Lansdown

has been using its insight and innovating to

meet client needs for many years and will invest

in these digital, personalised and on-demand

technologies to retain its leadership in client

service and experience.

Regulation

The regulator has a clear focus on client

outcomes and the value of long-term investing:

its recent consumer strategy recognises

the need for people to participate in markets

with a specific target of a '20% reduction in

the number of consumers with higher risk

tolerance holding over £10k in cash by 2025'.

This is equivalent to 1.7 million people. A focus

on outcomes and long term investing have long

been key principles for Hargreaves Lansdown

with our clear purpose to empower clients to

save and invest with confidence.

Technology

Technological capability has moved forward

– from cloud computing to the power of

Artificial Intelligence and the increase in hybrid

tools – what the wealth management industry

needs to move forward is available and ready

to be harnessed to drive the next level in

client experience.

Incumbent Players

We believe the existing incumbents in the

wealth management market are not always

meeting clients’ evolved needs. Expensive

adviser fees and confusing, time consuming

and jargon heavy investment providers

and services are not meeting clients’

changed expectations. Our digital insight

is unmatched in the direct-to-consumer

space – we understand what clients want

from their wealth management service

and the tools they need.

Governance Financial statements Other information

Hargreaves Lansdown

Report and Financial Statements 2022

Strategic report

MARKET OVERVIEW

AN ATTRACTIVE MARKET AT AN INFLECTION POINT CONTINUED

Each of these propositions will be a key focus

for our investment over the next few years and

offer clear reasoning for how we will capture

the market opportunity.

The investment programme will also deliver

improved operational efficiency, which will

deliver sustainable annualised cost savings of

c£55 million by FY26. This not only helps fund

our investment spend but will also provide us

with a more scalable and efficient technology

platform and business, where we can continue

to innovate and develop at a faster rate.

Our Competition

We operate in an increasingly competitive

landscape and new competitors continue

to enter the digital wealth market with

innovative technology and new solutions.

We are never complacent and continue to

watch the competitive landscape closely.

Where competition raises the awareness of

saving and investing we see this as a good thing.

Financial education and awareness in the UK

is relatively low and hence high quality, client

focused companies like ours have a key role in

addressing these issues. Healthy competition

ultimately delivers better outcomes for investors.

Achieving scale is key to becoming successful.

Once scale is achieved, sustainable profits rely

on continued investment. The updated strategy

we outlined in 2022 highlights where we see

the opportunity for HL to continue our growth

trajectory and the investment we will make to

deliver this – offering the next generation of

wealth management for our clients.

Hargreaves Lansdown never stands still.

We have always led the way in the direct-to-

consumer investment market and continue to

look to improve the experience for our clients,

ensuring value for money is delivered.

introduction in June 2011, has proved popular

with Hargreaves Lansdown clients. Many of

our LISA and JISA clients are new to Hargreaves

Lansdown highlighting how it serves as a

way of attracting a younger demographic

to our platform.

Pensions

Pension auto-enrolment in the UK has

revolutionised saving, with over 1.6 million

employers and more than 10 million employees

now participating in the programme.

The workplace will continue to play a pivotal role

in retirement saving and Hargreaves Lansdown

Workplace Solutions, which already provides

pension, investment and annuity services for

over 590 employers, can really make a difference

by improving employee engagement with saving

through a range of high quality services.

Better investor engagement with retirement

savings and the decisions people can take to

improve their financial futures is a high priority.

Hargreaves Lansdown is committed to being

at the forefront in helping people meet this

challenge. Through our varied retirement

proposition featuring Self Invested Personal

Pensions (SIPP), Drawdown and Annuities, as

well as a number of retirement planning tools,

we offer many options for clients to manage their

own retirement savings and the education and

support to build their confidence in doing so.

Cash Savings

Alongside our investment products, in the growing

interest rate environment we also offer market

leading cash savings rates through our cash

savings service. ‘Active Savings’, our digital

deposit service provides a simple digital solution

for managing cash savings across multiple

providers. Since its launch we have continued

to refine the proposition now offering Fixed term,

Easy Access and Cash ISA products. As at

30 June 2022, we had over 114,000 client

accounts with over £4.6 billion AUA, and are

seeing clients joining HL for the first time

through this service. Clients holding risk based

investments often have cash held elsewhere

so utilising Active Savings becomes a natural

extension of their interaction with us and

enables us to become ever more part of their

financial lives.

Our Investment

At our 2022 Capital Markets Day we outlined

our strategic priorities, and the £175 million

investment programme required to deliver

against the strategy. This investment will drive

significant change within the business, helping

us to better utilise our unmatched client insight

and data to deliver the client experience of

the future.

• We will expand our investment offering,

launching new funds through HL Fund

Management. These will be across different

sectors, incorporate ESG considerations

and have low cost options. The development

of these funds will drive significant increases

in the proportion of our clients’ assets that

are held in HL Funds over time and support

enhanced net new business as new clients

bring money onto our platform.

• We will accelerate our Active Savings service.

We will grow the assets held with strong

new bank partnerships, better functionality,

increased marketing to existing HL clients

and the general public and a clearer transition

to our Savings service, so we have the best

and most complete offer available.

• We will launch a new omni-channel advice

proposition that will aim to bridge the gap from

D2C to Advice and offer an integrated service

with a platform that helps our clients manage

key life events and adapts to their current

needs. This expansion will lead to a higher

share of wallet as clients consolidate their

savings and investments with us and increase

retention as more choose to build lifelong

relationships because we can help at all the

key financial moments that matter.

Lifetime ISA accounts

108,000+

with £1.0bn+ AUA

Junior ISA accounts

160,000+

with £1.4bn+ AUA

SIPP drawdown

accounts

59,000+

with £9.4bn+ AUA

Governance Financial statements Other information

Hargreaves Lansdown

Report and Financial Statements 2022

Strategic report

POWERFUL

DISTRIBUTION

ENGINE

OUR

RESILIENT

GROWTH

CYCLE

BUSINESS MODEL

Our client focused culture

enables us to build long-term

relationships and generate

a deep understanding of

their needs.

This informs our decision making,

underpinning our strategy to transform

the savings and investment experience,

combine the best of human expertise

augmented by digital capability and deliver

a uniquely personalised service to simply

manage your financial health and wealth.

Through our strategic investment we

fuel our business, creating a powerful

distribution engine that drives long-term

sustainable growth.

We attract clients with our high quality service

and offering, we engage them with our expert-led

content and easy to use functionality and we

retain them for the long-term by supporting them

in driving towards their financial goals.

Attract

Our market leading proposition and service

enables us to attract and build lifelong

relationships with clients. We provide the

broadest offering of savings and investment

solutions in the retail market.

With over 40 years of experience, we have

built a trusted brand with our clients, ranking

#1 for brand awareness in direct to consumer

investment firms. We continuously evolve our

approach to client acquisition, investing in our

marketing, service and proposition to ensure

we maintain and improve our high quality

offering and empower clients to save and

invest with confidence.

Engage

Client experience is our obsession. Through our

high quality client experience underpinned by our

expertise and technology we engage clients as

they build wealth, becoming their trusted partner

and reinforcing our relationship with them.

Our strategy is focused on enhancing our

technology, service and insights to ensure we

have a continuously improving and increasingly

personalised client experience.

The happier and more engaged clients we have,

the greater is the flywheel effect for increased

new business flows through transfers of

investments held elsewhere onto our platform,

new lump sum contributions and regular savings,

particularly with regards to the tax allowances

within a SIPP and an ISA.

Retain

Retention is key to our ongoing revenue

generation, as clients consolidate their wealth with

our service and build their assets through time.

Our broad proposition enables us to provide

a service that can support clients throughout

their lifetime and changing goals. Our deep

understanding of client needs combined with

our expertise on the wealth management market

enables us to focus our reinvestment and the

allocation of resources to improve existing and

develop new services, which makes us an ever

more integral part of clients’ daily financial lives.

Governance Financial statements Other information

Hargreaves Lansdown

Report and Financial Statements 2022

Strategic report

BUSINESS MODEL

OUR RESILIENT GROWTH CYCLE CONTINUED

Revenue

We generate revenues based on the value of assets

administered on our platform, activity levels of our

clients and a net interest margin on uninvested

cash and advice given to clients. Of these

revenues, 71% are ongoing in nature, providing

a high degree of profit resilience. By providing

an excellent service we attract new clients and

new assets, ensuring we are well positioned to

grow revenues across the market cycle.

Costs

From our revenues, we fund the administration

of the platform, our proposition and the business

as a whole. Key to our strategy is reinvestment

back into people, technology and marketing,

ensuring that we are always improving and

evolving our service and maintaining our

competitive advantage.

Profits and dividends

Our diversified revenue streams and scalability

deliver profits which quickly convert into cash.

After ensuring we maintain a surplus of capital

over and above our regulatory requirement,

we can then pay dividends to our shareholders.

Through placing clients at the heart of all we do,

we have already achieved significant scale and

the focused investment we have planned and

adherence to our core values will enable further

growth. This will deliver long-term value creation

across a range of stakeholders including:

Clients

We listen to clients and have built a strategy

based on our deep understanding of their needs.

Investing and championing their cause to help

them secure better financial futures and to make

their financial lives easier.

Employees

We continue to increase the diversity and

inclusiveness of our workforce and engage,

motivate and inspire them to deliver excellent

client service. People and Culture is one of the

five key pillars of our strategy and rewarding

careers are delivered through investment in

professional and personal development and

a focus on well-being and mental health.

Investors

We deliver long-term sustainable returns through

[share price appreciation] and a progressive

dividend policy.

Society

We are a responsible corporate citizen, playing

a positive, supportive and leading role in both

our local community and wider society.

The evolution of our strategy will underpin and

accelerate this value generating cycle of attracting,

engaging and retaining over the long-term.

Total AUA

£ billion

Net new business

£ billion

123.8

135.5

104.0

2022

2021

2020

5.5

8.7

7.7

2022

2021

2020

Total clients

’000

Clients with monthly savings

’000

1,737

1,645

1,412

2022

2021

2020

292

283

229

2022

2021

2020

FIND OUT MORE

Pg 12: Our strategy and KPIs

Measuring our strategic progress.

Pg 45 Our financial performance

The results we’ve achieved this year.

Pg 31: Responsible business

DRIVING STRONG GROWTH SUSTAINABLE RETURNS VALUE CREATION

Governance Financial statements Other information

Hargreaves Lansdown

Report and Financial Statements 2022

Strategic report

STAKEHOLDERS ARE

AT THE HEART OF

OUR STRATEGY

STAKEHOLDER ENGAGEMENT

The evolution of our strategy has been directly

informed by our stakeholders. Engaging with

them helps us to understand their evolving

needs and is critical for our decision making

and ongoing success.

We have invested in the development of our

stakeholder communities and continue to focus

on enhancing our relationships with them as

we believe it is the right thing to do.

Clients

Our strategy is built around our clients and

understanding their evolving needs is critical

to our long-term success.

Employees

HL would not be the business it is without our dedicated

and talented employees, always striving to deliver a

high quality service and act in line with our values.

Shareholders

As owners of our company and providers

of capital, supportive shareholders are

instrumental to our growth.

Society

Responsible businesses that support their local

communities and wider society will be those that

thrive in future.

How did we

engage with

them?

• Targeted group surveys

and website surveys

• Monitoring of client behaviours

across our digital platforms

• User testing as we evolve

our proposition and service

• Regular updates and insight from

our investment and saving experts

• Feedback received from the 1.269

million client calls received by

our Helpdesk

• Colleague Forums, biannual

colleague engagement surveys,

regular pulse surveys, and other

ad hoc focus groups

• Online communications portal

to share key activity and updates

• Regular internal communications

and briefing sessions from senior

leaders and executives

• Peer recognition scheme

to identify colleagues who

demonstrated outstanding

behaviours and conduct aligned

to our values and the HL Way

• Our senior management team

met with shareholders and

potential investors across

the year via a programme of

results presentations, individual

and group meetings and

attendance at in-person and

UK and US virtual conferences

• Our AGM, which provides an

opportunity for shareholders

to ask questions and vote

on resolutions

• Our corporate brokers and

sell-side analysts provide valuable

feedback and market insight

• Active engagement with

policymakers to ensure the

position of retail investors in

the UK is understood and policies

are designed to help investors

• We have established a Savings

and Resilience Sounding Board

to explore options for supporting

clients with financial resilience,

with representation from

HM Treasury, the Department

for Work and Pensions, FCA,

Money and Pensions Service and

other businesses and charities

• We have explored citizenship

and sustainability agendas

through various relationships with

community partners, charities and

Bristol One City Plan. We listened

to issues raised at our AGM

What were

the key topics

raised?

Clients told us that they wanted:

• Practical help on how to achieve

their financial goals, and invest

in line with ‘responsible’ or

ESG values

• Help to navigate challenging

times: inflation, cost of living

crisis etc.

• Great value and support across

all stages of their savings and

investments life

• Frameworks and guidance to

help make the best financial

decisions and ultimately achieve

good outcomes

• Our strategy and how the

evolution will drive development

for colleagues and the next

stage of growth for the business

• What the future of work looks

like for HL, building on the

positive lessons learnt from

the COVID-19 pandemic

• The importance of inclusion,

diversity and continued

development to succeed

for the future

• The cost-of-living crisis and

how this impacts individuals

• How will the business return

to operating margin growth?

• What is the level of

investment needed to

deliver sustainable growth?

• The increasing threat of

competition and pricing pressure

• Quality and behaviours

of new clients

• How we are dealing with

aspects of ESG as a business,

a platform and a Fund Manager

• Savings and Resilience of the

nation in the aftermath of the

COVID-19 pandemic and given

the cost of living crisis

• The Guidance-Advice boundary

and how clients may benefit

from greater support with

their investments

• Retail access to IPOs

• Supporting the communities

in which we operate to thrive

• To consider our climate strategy

and the environmental impact

of our operations

How did

we respond

• We built our strategy around our

understanding of clients – aiming

to enhance our high quality

service in line with their needs

• We launched a responsible

investment hub on our website

and announced plans to ensure

our new fund launches reflect

ESG considerations

• We enhanced our transfer

service, improving the speed

and ease of use for clients

• We launched more services

on our mobile app including the

ability to fund switch and easier

log-in options for those needing

two factor authentication

• We continued our better

investors campaign, using data

to help provide education and

insight to clients who need help

with investment basics like

diversification and risk

• Enhanced the office

environment to support new

flexible working practices

• Launched a ‘Future of Work’ task

force looking at the best future

ways of working that support

our culture and delivery but

also enhance the colleague

value proposition

• Involved all leaders and teams

in the cascade of our strategy,

focusing on developing our

people and enabling our culture

• Continued to execute our I&D

strategy, improving diverse

representation in leadership

and launching the Strive

internship programme

• Provided a one-off payment for

colleagues most impacted by the

cost of living crisis, designed to

give colleagues some breathing

space as they faced rising costs

• We held a Capital Markets Day

to outline our strategy and

address specific topics raised

• Key topics were incorporated

into presentations and results

announcements across the year

and for separate governance and

ESG meetings held by the Chair

• Regular reports and feedback

to the executive team and the

Board on key market issues

and concerns

• We have considered climate

change impacts on our business

and issued our TCFD report

and our first SASB assessment

• We have launched the Savings

& Resilience Barometer in

partnership with Oxford

Economics. A tool that will

support clients and policy

makers with better understanding

financial resilience issues

• We have campaigned to increase

access to retail IPOs and increase

investor access to guidance

• We have undertaken fundraising

initiatives and events to support

our local HL Foundation Charities

of the year, 1625 Independent

People and Bristol Mind

• We have launched a new

‘Switch your Money On’ offering

free insight and education on

key investment topics from HL

and industry experts

FIND OUT MORE

Pg 12: Strategy and KPIs

Section 172 Statement

You can read about how the Board considers the

interests of our stakeholders when complying

with its obligations under Section 172

Companies Act 2006 on page 118

Governance Financial statements Other information

Hargreaves Lansdown

Report and Financial Statements 2022

Strategic report

STAKEHOLDER ENGAGEMENT

CONTINUED

Clients

Our strategy is built around our clients and

understanding their evolving needs is critical

to our long-term success.

Employees

HL would not be the business it is without our dedicated

and talented employees, always striving to deliver a

high quality service and act in line with our values.

Shareholders

As owners of our company and providers

of capital, supportive shareholders are

instrumental to our growth.

Society

Responsible businesses that support their local

communities and wider society will be those that

thrive in future.

How did we

engage with

them?

• Targeted group surveys

and website surveys

• Monitoring of client behaviours

across our digital platforms

• User testing as we evolve

our proposition and service

• Regular updates and insight from

our investment and saving experts

• Feedback received from the 1.269

million client calls received by

our Helpdesk

• Colleague Forums, biannual

colleague engagement surveys,

regular pulse surveys, and other

ad hoc focus groups

• Online communications portal

to share key activity and updates

• Regular internal communications

and briefing sessions from senior

leaders and executives

• Peer recognition scheme

to identify colleagues who

demonstrated outstanding

behaviours and conduct aligned

to our values and the HL Way

• Our senior management team

met with shareholders and

potential investors across

the year via a programme of

results presentations, individual

and group meetings and

attendance at in-person and

UK and US virtual conferences

• Our AGM, which provides an

opportunity for shareholders

to ask questions and vote

on resolutions

• Our corporate brokers and

sell-side analysts provide valuable

feedback and market insight

• Active engagement with

policymakers to ensure the

position of retail investors in

the UK is understood and policies

are designed to help investors

• We have established a Savings

and Resilience Sounding Board

to explore options for supporting

clients with financial resilience,

with representation from

HM Treasury, the Department

for Work and Pensions, FCA,

Money and Pensions Service and

other businesses and charities

• We have explored citizenship

and sustainability agendas

through various relationships with

community partners, charities and

Bristol One City Plan. We listened

to issues raised at our AGM

What were

the key topics

raised?

Clients told us that they wanted:

• Practical help on how to achieve

their financial goals, and invest

in line with ‘responsible’ or

ESG values

• Help to navigate challenging

times: inflation, cost of living

crisis etc.

• Great value and support across

all stages of their savings and

investments life

• Frameworks and guidance to

help make the best financial

decisions and ultimately achieve

good outcomes

• Our strategy and how the

evolution will drive development

for colleagues and the next

stage of growth for the business

• What the future of work looks

like for HL, building on the

positive lessons learnt from

the COVID-19 pandemic

• The importance of inclusion,

diversity and continued

development to succeed

for the future

• The cost-of-living crisis and

how this impacts individuals

• How will the business return

to operating margin growth?

• What is the level of

investment needed to

deliver sustainable growth?

• The increasing threat of

competition and pricing pressure

• Quality and behaviours

of new clients

• How we are dealing with

aspects of ESG as a business,

a platform and a Fund Manager

• Savings and Resilience of the

nation in the aftermath of the

COVID-19 pandemic and given

the cost of living crisis

• The Guidance-Advice boundary

and how clients may benefit

from greater support with

their investments

• Retail access to IPOs

• Supporting the communities

in which we operate to thrive

• To consider our climate strategy

and the environmental impact

of our operations

How did

we respond

• We built our strategy around our

understanding of clients – aiming

to enhance our high quality

service in line with their needs

• We launched a responsible

investment hub on our website

and announced plans to ensure

our new fund launches reflect

ESG considerations

• We enhanced our transfer

service, improving the speed

and ease of use for clients

• We launched more services

on our mobile app including the

ability to fund switch and easier

log-in options for those needing

two factor authentication

• We continued our better

investors campaign, using data

to help provide education and

insight to clients who need help

with investment basics like

diversification and risk

• Enhanced the office

environment to support new

flexible working practices

• Launched a ‘Future of Work’ task

force looking at the best future

ways of working that support

our culture and delivery but

also enhance the colleague

value proposition

• Involved all leaders and teams

in the cascade of our strategy,

focusing on developing our

people and enabling our culture

• Continued to execute our I&D

strategy, improving diverse

representation in leadership

and launching the Strive

internship programme

• Provided a one-off payment for

colleagues most impacted by the

cost of living crisis, designed to

give colleagues some breathing

space as they faced rising costs

• We held a Capital Markets Day

to outline our strategy and

address specific topics raised

• Key topics were incorporated

into presentations and results

announcements across the year

and for separate governance and

ESG meetings held by the Chair

• Regular reports and feedback

to the executive team and the

Board on key market issues

and concerns

• We have considered climate

change impacts on our business

and issued our TCFD report

and our first SASB assessment

• We have launched the Savings

& Resilience Barometer in

partnership with Oxford

Economics. A tool that will

support clients and policy

makers with better understanding

financial resilience issues

• We have campaigned to increase

access to retail IPOs and increase

investor access to guidance

• We have undertaken fundraising

initiatives and events to support

our local HL Foundation Charities

of the year, 1625 Independent

People and Bristol Mind

• We have launched a new

‘Switch your Money On’ offering

free insight and education on

key investment topics from HL

and industry experts

Governance Financial statements Other information

Hargreaves Lansdown

Report and Financial Statements 2022

Strategic report

ENABLE OUR PEOPLE,

STRENGTHENING

OUR CULTURE

PEOPLE

Our colleagues are our biggest asset and are

fundamental to delivering our vision, our strategy,

and the sustainable growth of our business.

We want our colleagues to have meaningful

and rewarding careers and make HL a great

place to work, develop and fulfil career potential.

Unprecedented times

The past year has continued to be difficult for all

of us. Whether it concerns the global pandemic,

war in Ukraine, cost of living crisis or the volatile

stock market – the wider environment has had

a significant impact on all our colleagues.

Responding to these challenges and supporting

our colleagues through them has been a critical

focus. At the end of August 2021, we rewarded

all colleagues at certain role levels with a

one-off special award to thank them for working

together and supporting our clients through the

challenging pandemic period. Subsequently

in May this year, in recognition of the fact that

rising living costs were impacting the finances

of colleagues, we provided a one-off payment

to those we believed would be most adversely

impacted, based on their current basic salary.

This payment was designed to give colleagues

some breathing space as they faced rising costs.

Alongside this payment, we also made some

immediate changes to the pay levels of our

entry level roles in Service and Facilities and

continue to invest in our colleagues as part of

our year-end review through salary increases

and our bonus scheme.

The aftermath of the pandemic has presented

new opportunities to improve how we work

together, and we are actively involving our

colleagues in how we develop this. As our

colleagues have been able to return to the

office, we have been continuing to support them

in a new flexible way of working. We have been

listening and responding to colleagues needs

to ensure they are motivated and enabled to

perform at their best. This includes improving

our office environment to make this an inclusive

and collaborative space for colleagues.

Governance Financial statements Other information

Strategic report

Hargreaves Lansdown

Report and Financial Statements 2022

PEOPLE

ENABLE OUR PEOPLE, STRENGTHENING OUR CULTURE CONTINUED

Our culture and the HL Way

Over the past year we’ve placed a big focus

on developing our culture as this underpins

the delivery of our strategy.

Our client focused mind-set has helped us

become the successful HL we are today and

has made us an industry leader. As we continue

to develop and grow, the way we conduct

ourselves is critical for us to thrive at scale.

Last year, we launched ‘The HL Way’ to help

colleagues make the right choices for our clients,

and each other. The HL Way is how we work,

providing tool sets for good decision making,

with guides and examples of good practice.

It brings our values and the Conduct Rules to

life, building on our aim – to help our clients

to save and invest with confidence – using our

knowledge, our expertise, and remembering

our regulatory responsibilities.

This year, we have evolved the HL Way to help

colleagues understand how best to fulfil their

personal responsibilities, making clear what

we stand for, the principles to follow and why

it’s important. Providing clear guidance helps

colleagues live by our values, make effective

decisions, and tells them where to go for help

when things don’t feel right.

Each of our colleagues play an

important role in the team at HL.

The HL Way will help colleagues

make the right choices for our

clients, and each other.

Chris Hill

Chief Executive Officer

Strengthening our culture is a key priority as

this is essential to delivering our strategy and

providing great service for our clients. Over the

past year we’ve delivered a range of activities

focused on colleague engagement. This has

ranged from company-wide hybrid town hall

events, expert webinars and focus groups to

prepare and engage colleagues with our new

strategy and transformation programme, ‘act of

kindness’ gifts, and social events to foster our

sense of community and collaboration.

This year we hosted our first in-person HL

Heroes recognition awards where we asked

colleagues to nominate colleagues who have

demonstrated outstanding behaviours and

conduct aligned to each of our values, and how

this has positively impacted clients, colleagues,

our community, stakeholders and the business

as a result. Overall, we received 218 high calibre

nominations to acknowledge those colleagues

who have gone above and beyond.

Outstanding and diverse talent

Our focus on building a diverse and inclusive

culture is not simply because it is the right thing

to do. We believe it will lead to better outcomes

for clients, colleagues, our community and

our business. Diversity in its broadest sense,

including race, age, gender, and religion,

supports us to make better business decisions,

manage risk more effectively and drive

innovation. We believe inclusion and diversity

is everyone’s responsibility, so every colleague

has this in their objectives, ensuring we all

play our part.

Our inclusion and diversity strategy has three

priority areas and an aligned action plan to drive

progress. This strategy will enable us to continue

to build our inclusive culture and brand where

colleagues feel engaged whilst attracting a broad

pool of talent.

More information about our Inclusion

and Diversity approach and initiatives

can be found at: www.hl.co.uk/

corporate-social-responsibility/diversity

Female and ethnic minority representation

Two of our priority areas relate to the progression

and retention of female and ethnic minority

talent at HL. We know that tone from the top

and executive buy-in and accountability continue

to be crucial to achieving sustainable change.

We have further strengthened commitment to

progress this year by introducing specific gender

and ethnicity performance targets for all

executive members.

It was just really nice to

have the HL Heroes in person

and meet colleagues for the

first time, whilst in a positive

environment. I felt really

honoured to be there and

I hope it continues each year

to inject such positivity into

the workplace.

HL Colleague

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PEOPLE

ENABLE OUR PEOPLE, STRENGTHENING OUR CULTURE CONTINUED

Female representation

We have made strong progress in increasing

the proportion of women and creating a diverse

workforce at HL and we continue to seek

to improve:

• We are signatories of the Women in Finance

Charter and are proud to have exceeded our

target range (25-30% by 2021) , with 31.5%

of senior management roles held by women.

• We have exceeded the FTSE Women Leaders

target of 40% women on Boards and are

proud to have a female Chair, Chief Financial

Officer, Senior Independent Director and

majority of female Board Committee Chairs.

• We have launched a new partnership with

Women on Boards.

• HL was featured as a case study in the Fawcett

Society’s ‘Menopause in the Workplace: Impact

on Women in Financial Services’ report.

• As of 30 June 2022, women made up 33% of

the Executive Committee and its direct reports.

• We continue to participate in the 30% Club’s

‘Women Ahead’ mentoring scheme.

This year, the 2021 gender pay gap figures show

that we have reduced our Mean Gender Pay Gap,

Median Gender Pay Gap and Median Bonus Gap

since the last submission. Our Median GPG

continues to improve year-on-year, from 19.1% to

14.5%, with continued positive movement since

the figures from 2018. The Mean Bonus Gap has

widened slightly, by 1.2% in the last year.

These figures reflect the increases in female

representation at Board and Director level

because of our strategic focus on hiring and

promoting more, and losing fewer, senior women.

However, we know to continue to ensure success

this needs to filter down into the organisation

to drive long-term change.

Full details of our Gender Pay Gap report

can be found at www.hl.co.uk/corporate-

social-responsibility/gender-pay-gap

Ethnic minority representation

Since the launch of our Inclusion and Diversity

strategy in 2020, we have focused on increasing

the ethnic diversity of our workforce and

supporting the progression and development

of Black, Asian, and Minority Ethnic colleagues.

Progress this year includes:

• Winning a Stepping Up award acknowledging

the leadership and support HL is providing to

changing diversity and inclusion across the city

of Bristol.

• Launching the Strive internship scheme, aimed

at providing paid work experience opportunities

to Black, Asian and Minority Ethnic Students

across the region. The scheme has won an

Institute of Student Employers award for our

outstanding partnership with the University

of the West of England.

• Introducing representation targets for female,

ethnic minority, and black representation at

senior and mid-career levels.

• The Board meeting the Parker Review

recommendation to have at least one Director

from an ethnic minority background by 2021.

Our workforce

Total workforce 2022: 2,042

Total workforce 2021: 1,842

41%

Female

59%

Male

36%

Female

64%

Male

As at 30 June 2022 As at 30 June 2021

Board of

Directors

Other senior

management

Total

employees

(FTE)

Board of

Directors

Other senior

management

Total

employees

(FTE)

Female 5 (50%) 13 (28%) 839 (41%) 3 (33%) 10 (26%) 670 (36%)

Male 5 (50%) 34 (72%) 1,203 (59%) 6 (67%) 29 (74%) 1,172 (64%)

1 Other senior management is defined as an employee who has responsibility for planning, direction or

controlling the activities of the Group, or a strategically significant part of the Group, other than the Board

of Directors.

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PEOPLE

ENABLE OUR PEOPLE, STRENGTHENING OUR CULTURE CONTINUED

Inclusive culture and our colleague networks

Alongside our focus on diversity, we have

committed to creating an inclusive culture at HL.

Our award-winning HL colleague networks play

a critical role in fostering inclusion and belonging,

and each one is supported by an Executive

sponsor to ensure their activities get the

visibility and support they need to have the

greatest impact.

These networks continue to grow their

membership, activities and influence and include:

• Gender diversity group

• Cultural diversity group

• Kaleidoscope (LGBT+)

• Wellbeing groups including mental,

physical fitness and social activities

• Sustainability Group

• Financial Inclusion

• Chronic Conditions and Disability Group

Over the year, the groups have been active

in promoting the importance of inclusion and

diversity as well as engaging colleagues. Over

300 colleagues are members of one or more of

the networks, and the networks have delivered

events across the year, marking key dates and

campaigns, with both external speakers and

internal panels.

We are an equal opportunities employer and give

full consideration to all applications. When a

disabled colleague commences employment or

becomes disabled during employment we will,

in consultation with the colleague, ensure that

such reasonable adjustments are made as

required to enable them to work safely and

effectively. We recognise that all colleagues have

equal rights to career development and training

based on their abilities and therefore this will

be made accessible to them, with reasonable

adjustment considered as required.

Whilst we know there is always more we can do,

we feel proud that our 2022 Colleague Survey

results showed that 83% of colleagues feel

positive that HL values and promotes employee

diversity (with 4% responding negatively and

the remainder neutral).

Other progress this year in supporting inclusion

at HL includes:

• Issued a new Trans and Non-binary Equality

policy and introduced gender-neutral toilets

• Launched a mandatory inclusion and diversity

e-learning for all colleagues to support us in

building an inclusive and psychologically safe

environment at HL

• Rolled out Empowered and Inclusive Team

Working Masterclasses for leaders

• Launched ‘ExCo listening sessions’ supporting

Executive Committee members to gain greater

insights into the lived experiences of different

colleague groups

Reward

Key to attracting and retaining the best people

is our approach to reward. We use independently

benchmarked pay and benefits data to ensure

we pay our colleagues fairly for the work they do.

We believe in clear, fair, and transparent pay

and reward. Our salaries go beyond our legal

obligations, the National Living Wage (and

national minimum wage for those on internships,

placements, or apprenticeships) and we

are proud to say that we are Living Wage

Foundation Accredited.

We do, however, know we can do more. Building

and maintaining a strong colleague proposition

that ensures colleagues are rewarded fairly

and that we are competitive in the market is

fundamental to ensuring the success of HL.

As such we’re working on developing and

improving our colleague value proposition.

Given the challenging external conditions faced

in the year from the increased cost of living, we

have supported our colleagues with a one-off

‘breathing space’ cash payment in addition to

their pay.

To complement our pay, we include most of

our colleagues in a bonus scheme linked to

the success of HL and individual performance.

The ‘how’ is just as important to us as the ‘what’

and colleagues are assessed on the delivery

of their objectives, the behaviours they display

and how they’ve demonstrated our values.

We believe that our colleagues should be

able to share in the success of our business

and all colleagues are eligible to sign up to

our Save as You Earn (SAYE) scheme. As at

30 June 2022, c45% of eligible colleagues are

currently participating in one of our existing

Share Save Schemes.

To complement our direct financial rewards,

we provide Company matched pension

contributions (which includes a double matching

scheme to encourage our colleagues to save

for their retirement) and extended life insurance

protection. HL Rewards, our flexible benefits

scheme, offers a comprehensive range of

protection, health, financial and lifestyle benefits

to ensure we provide a benefits package that our

colleagues value. This includes double matching

of any payroll giving that colleagues make to

the HL Foundation.

Learning and development

Learning and development is a key component

of our People Strategy and aligns to our overall

strategy and approach. We want everyone to

have the opportunity to develop as far as their

effort and capability will take them.

We recognise the importance of building a

pipeline of skilled and motivated talent for future

leadership and expert roles and have developed

several interventions to ensure we deliver this

We respect, value and embrace

diversity and ensure everyone

is recognised and respected

for the different perspectives

they bring.

Chris Hill

Chief Executive Officer

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PEOPLE

ENABLE OUR PEOPLE, STRENGTHENING OUR CULTURE CONTINUED

pipeline to meet the business needs. Our fully

blended learning provision offers a bespoke

service with the use of technology providing

bite-sized, digital learning to support the ongoing

engagement and development of colleagues

when they need it.

We are committed to supporting the next

generation and offer people the opportunity to

start their career or gain work experience with

us. This year we have introduced a new Service

Graduate Scheme alongside our existing

rotational scheme, a range of apprenticeships

for school/college leavers and career changers.

We also offer 12-month industrial placements

for undergraduates, internships, and

work experience.

Colleague engagement and listening

It is widely recognised that an organisation

whose colleagues understand how their work

adds value is critical to strategic delivery.

We believe it is important to listen to and

understand our colleagues’ views and motivation;

their honest feedback is crucial in evolving our

colleague engagement programme. Our most

recent annual colleague engagement survey

received a strong response rate of 73% (2021:

70%). Over the past few years, we’ve seen our

key metrics fluctuate around a stable average.

Our engagement score in our most recent survey

was 64% (2021: 66%).

In addition to our twice-yearly engagement

survey, we have run regular pulse surveys so that

we can quickly respond to colleague sentiment.

We’ve also run additional surveys and focus

groups to obtain colleague insight into topics

such as communication, whistleblowing, and

our future workplace. We are always listening,

so this year, we launched colleague listening

sessions where members of the Management

Team listened to what colleagues had to say on

topics around pay, progression and culture at HL.

The Colleague Forum was set up in January 2019

in line with the UK Corporate Governance Code

to make sure that the ‘voice of the workforce’

is considered in the decision making process

of the Board. It meets periodically throughout

the year and is an important forum for obtaining

and discussing colleagues’ views on key matters

affecting the Group. Key topics discussed in

the period under review have included Executive

Director and senior management pay, and the

Group’s culture and strategy.

Human rights

We continue to embed respect for human rights

and aim to ensure that our business operations

and supply chain are free from modern slavery,

exploitation, and discrimination. There have

been no recorded incidences of modern slavery

in our supply chain, but we are not complacent.

We continue to monitor risks closely and want

to drive up opportunities for colleagues to raise

the flag and seek help when needed. We are

committed to acting ethically and with integrity

in all our business dealings and relationships and

to implementing and enforcing effective systems

and controls to ensure slavery is not taking place

anywhere in our business, or in any of our supply

chains. We recognise this is a serious global

issue and are committed to improving our

practices and playing our part in combatting

slavery and human trafficking.

We adhere to our Human Rights policy at all

times, and we are fully compliant with our

obligations under the Modern Slavery Act 2015.

One of our core values is to do the right thing,

which includes treating people fairly whether

they are our clients, colleagues, contractors

or people working in our supply chain. Our

Human Rights Policy reflects key developments

in the human rights agenda and defines our

commitment to human rights including, but not

limited to, the prevention of modern slavery and

the provision of remediation when necessary, in

our operations and supply chains. This includes

the colleagues we employ and their right to be

treated equally and their freedom of association.

We all have a responsibility to be alert to the risks

of modern slavery. We continue to take further

steps to ensure we have the right training and

controls in place to combat slavery and human

trafficking, and in our statement, we explain how

we are doing this.

Please visit our website –

www.hl.co.uk/__data/ assets/pdf_file/

0009/11399832/Modern-Slavery-Act.pdf

Anti-bribery and corruption

Hargreaves Lansdown maintains a full suite of

policies and procedures to guard against bribery

and corruption. This includes an Anti-Bribery

Policy, outlining the offences, responsibilities

of all colleagues and clear reporting procedures;

a Whistleblowing policy and process; Anti-Money

Laundering and Market Abuse policies and

procedures for dealing with making and

accepting gifts and hospitality.

All colleagues undertake bespoke training

programmes, at least annually, for all these areas,

in addition to having access to online guidance

and procedures aiding awareness. Colleagues

can access policy and guidance statements via

the company-wide Sharepoint page and these

procedures are reviewed and updated on a

periodic basis by the Senior Managers

responsible for them.

Please visit our website – www.hl.co.uk/

corporate-social-responsibility/

our-policies

83%

of colleagues feel

positive that HL values

and promotes employee

diversity (2021: 72%)

Response rate to the

annual colleague

engagement survey

Response 73%

(2021: 70%)

No response 27%

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BUILDING OUR POSITION

AS A RESPONSIBLE BUSINESS

CORPORATE CITIZENSHIP

Our approach to responsible citizenship

Hargreaves Lansdown is enabling clients

and society to build their financial resilience.

As a leading FTSE 100 financial services

company, we are committed to integrating

sustainable social, ethical and environmental

considerations into our long-term view

of managing the wider environment and

social footprint.

We do this through three approaches

• HL’s actions as a responsible business

• HL’s stewardship as a responsible

fund manager

• HL’s offering as a responsible investment

and savings service provider

Our vision for ESG at HL is to inspire confidence for

a sustainable, resilient and successful financial future.

FIND OUT MORE

Pg 44: Non-financial

information disclosures

OUR VISION,

STRATEGY,

CULTURE

AND VALUES…

…DRIVE OUR

COMMITMENT

TO CORPORATE

CITIZENSHIP

Community

Play a positive, supportive and

leading role in our local community.

Pg 33

Responsible business focus

Ensuring responsible and sustainable decision

making is at the heart of everything we do to

empower clients, our local community and

wider society.

Pg 34

TCFD

To reduce our contribution to climate

change and support the transition

to a low carbon economy.

Pg 37

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CORPORATE CITIZENSHIP

BUILDING OUR POSITION AS A RESPONSIBLE BUSINESS CONTINUED

In order to deliver on our purpose, to empower

people to save and invest with confidence,

we encourage clients to take control of their

financial future and support them in establishing

and maintaining the resilience that this

requires over a lifetime. We are a responsible

and sustainable business that works to deliver

for all our stakeholders.

In 2022 we have continued to make progress

on our ESG strategy. From supporting the

local community to minimising our global

environmental impact, we want to ensure our

actions have an increasingly positive impact.

In the community we have:

• Helped young people to get the best start

to life to enable them to gain the skills and

confidence to get a job.

• Supported local businesses through mentoring.

• Supported the regional economic recovery plan.

E S G

‘E’ is about how we

reduce our impact on

the environment and

ensure our business and

the service we offer our

clients is sustainable

for the long term.

It means assessing and addressing

risks to the resilience of our business

over the long term and as such ensuring

we are well prepared for the challenges

our clients, community and other

stakeholders will face in future.

‘S’ is about how we

support our community,

clients and colleagues.

There is increasing scrutiny on how

businesses treat their colleagues

and communities – it needs to be fair,

transparent and have clear alignment

to addressing the issues in our society

including Inclusion and Diversity.

We need to ensure that our colleagues

and clients can be confident that HL

is a business that does the right thing.

‘G’ is about how our

governance supports

the long-term resilience

and sustainability of

our business.

We need an effective governance

structure that allows for the robust

challenge and transparent reporting

that is expected from a business of our

size and influence. It helps us to make

and execute better decisions. The FCA

has made the importance of business

culture very clear. Clear and effective

governance is key to this and integral

to our ESG and wider strategy.

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CORPORATE CITIZENSHIP

BUILDING OUR POSITION AS A RESPONSIBLE BUSINESS CONTINUED

Community

Supportive and leading role

in our local community.

We’re proud of the contribution our colleagues

and business make to the local community

and our focus has been on supporting activities

that encourage social mobility whether through

education, food provision or financial resilience.

We appreciate the difficulties the pandemic

has presented to education and have donated

over 140 laptops to schools in order to close

the digital divide. Our apprenticeships and

placements offer students the opportunity

to gain experience and life skills.

One City Approach:

We are a founding signatory of the Bristol

Equality Charter – a pledge by the signatories

to take actions relevant to them, to improve

equality and diversity across the city. We are

also a founder member of the Bristol Equality

Network, and we have signed the Women in

Business Charter.

We continue to be active participants, through

our involvement with the Bristol City Office,

including involvement in the Skills and Economy

Board, supporting the city wide initiative to end

period poverty in Bristol and the Stepping Up

mentoring scheme, a region wide positive action

leadership programme aimed at changing the

diversity leadership landscape across the public,

voluntary and commercial sector.

Volunteering:

The HL Volunteering Scheme gives people

a chance to volunteer by having two days

(or 16 hours) of the calendar year to offer their

time, skills and experience to good causes.

We run a number of volunteering schemes,

focused on building social mobility and improving

resilience. These are primarily based within

schools, developing the building blocks to enable

future resilience, focusing on basic numeracy

and literacy skills. Our Envision Mentoring

programmes enable young people to work with

business mentors to tackle a real-life social issue,

whilst gaining insight into the world of work

through meaningful employer engagement.

Additionally, we work with the Bristol Sport

Foundation to support disadvantaged children

through providing volunteers to hear primary

school children read aloud, or providing

mentoring support to students at risk of dropping

out of the school system.

All of our schools volunteering activity takes

place with young people who have been

identified as in receipt of the pupil premium/

eligible for free school meals, with the hope of

building their confidence and employability skills.

We also support local organisations such as

Fareshare and Feeding Bristol, in addition to

sustainability focused organisations such as

Avon Needs Trees, Your Park and Marine

Conservation Trust.

Our volunteering scheme has exceeded

5,750 hours volunteered since 2019.

HL Foundation

The HL Foundation is our charitable trust.

The Foundation’s mission is to utilise the skills

and time of our workforce and partners to make

a positive, sustainable difference in the world

around us.

The charities we support are nominated and

selected by employees.

Our charity partners for 2022 are 1625

Independent People and Bristol Mind. We have

a programme of engagement focused on

fundraising and volunteering activities, including

financial education sessions and skill based

volunteering to support the charity operations.

In light of current affairs, we also set up a

fundraising appeal to support those impacted

by the war in Ukraine.

Our fundraising aims are to:

• Continue to fund a mental health worker

and a mentoring coach to support young

people’s well-being

• Support career guidance, financial wellness

and inspiring future employment opportunities

for vulnerable young adults

• Cover the cost of phone calls to MindLine

helpline for one month

• Fund the training for at least 20 volunteers

to be trained on the MindLine helpline

As well as support to fundraising, we also

offer colleagues double matched payroll giving.

This has trebled the numbers of colleagues

donating via Give As You Earn (GAYE).

All of the legal and administration costs of

the Foundation are met by the Group so 100%

of the money raised goes to the employee

nominated charities.

More details can be found on the website

www.hl.co.uk/corporate-social-

responsibility/hl-foundation

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CORPORATE CITIZENSHIP

BUILDING OUR POSITION AS A RESPONSIBLE BUSINESS CONTINUED

Responsible business focus

Responsible and sustainable

decision making at the heart

of everything we do.

Savings and Resilience Barometer

Financial resilience has become a central issue

over the past two years as we continue to

experience and live with the consequences

of the pandemic and the economic uncertainty

it has created.

In January we launched a wide-ranging piece of

research on the financial resilience of the nation.

This research sought to look at how issues,

from debt and protections, to savings and

investments, interact so we can understand

how to build a more resilient nation.

This research was developed from our

‘5 to Thrive’ campaign which focuses on the

five core pillars which are the building blocks to

developing greater financial resilience; controlling

your debt, protecting you and your family,

saving a penny for a rainy day, plans for later

life and investing to make more of your money.

By building an ongoing campaign around this,

we are democratising some of the expertise

that we have within our advice teams for those

that can’t or won’t pay for such services.

More information can be found at

www.hl.co.uk/features/5-to-thrive and

our comparison tool can be found here:

www.hl.co.uk/features/5-to-thrive/

savings-and-resilience-comparison-tool.

Tax strategy

Integrity and good conduct are central to

our culture and this means we aim to comply

with both the spirit and the letter of the law

and are committed to conducting our tax affairs

in a clear, fair and transparent way.

Taxes provide public revenues for government

to meet economic and social objectives. Paying

and collecting taxes is an important part of our

role as a business responsibly operating within

and contributing to society.

We aim to comply with all our tax filing,

tax reporting and tax payment obligations.

We seek to maintain an open, honest and

positive working relationship with tax authorities

and we do not undertake aggressive tax

planning. Our corporation tax and employer’s

National Insurance paid in respect of the

year ended 30 June 2022 was £61.6 million

(2021: £77.5m). In addition, we pay other taxes

such as VAT, stamp duty and business rates.

Our full tax strategy is available at:

www.hl.co.uk/about-us/tax-strategy

United Nations Sustainable

Development Goals (UNSDGs)

The UNSDGs provide a focus for how

businesses, governments and civil society can

tackle these challenges in order to promote a

more sustainable future for all. They have helped

to inform our thinking about where we can play

a role and we contribute in different ways to

12 out of the 17 goals. Find out more about how

we align to the UNSDGs on the CSR section of

the HL website.

Hargreaves Lansdown contribute

to the following United Nations

Sustainable Development Goals

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CORPORATE CITIZENSHIP

BUILDING OUR POSITION AS A RESPONSIBLE BUSINESS CONTINUED

Supporting climate action

Our commitment to sustainability means

integrating social, ethical and environmental

considerations into our operations. Strong

corporate governance ensures sustainable

management and growth with a long-term

view and a responsibility to manage our wider

environment and social footprint. We have

committed to support the delivery of the

United Nations Sustainable Development Goals

(UNSDGs) and finding opportunities within

our businesses to build a cleaner, more resilient

and inclusive world.

HL acknowledges the impact it has on the

environment and climate change, and is

committed to:

• Identifying and assessing environmental

aspects to determine those that are significant,

as explored in our TCFD report on page 37.

• Committing to be net zero by at least 2050 and

to be carbon neutral across our Scope 1, 2 and

3 business travel and employee commuting

emissions by 2025.

• Providing all employees with relevant education

and information to encourage them to live and

work in an environmentally responsible manner.

• Focusing on continual improvements in

environmental performance and activity by

means of a proactive colleague Environmental,

Sustainability and Climate Change network.

Our business is fundamentally based on

intellectual capital and conducts the majority

of client transactions online and undertakes

no industrial activities. Therefore, the direct

environmental and social impacts of our daily

operations are limited. We are aware that under

Scope 3 emissions, our investment portfolio is

the most material source of carbon emissions

and we are currently reviewing our approach

to this with an external agency.

Running and maintaining our IT infrastructure

at our offices and data centres comprises

the main source of our environmental impact.

This supports our award winning platform which

is fundamental to the success of our business.

The installation of energy-efficient servers,

transitioning to cloud hosted services and a

programme of cyclical replacement of hardware

and software reduces our energy usage

and cost.

HL Tech, our Warsaw technology hub, operates

in a similar way, in a new, environmentally friendly

building, where the impact is also low.

Doing it better for our clients

Our objective of reducing waste and minimising

the environmental impact of our business is

aligned with our objectives of protecting client

data, reducing costs and improving efficiency.

We aim to deal with clients and other businesses

electronically wherever possible, not only to

speed up information transfer, but also to reduce

the amount of paper we use.

We have invested heavily in providing a user-

friendly, comprehensive website, a mobile app

and automated links to banks and fund providers.

As a result, 93% (as of June 2022) of our clients

are registered for online accounts and 81% now

use our paperless service.

Where we do send out paper, such as our

flagship magazine ‘The Investment Times’,

we use sustainable resources and minimise

our use of plastic. The Investment Times is now

sent in recyclable paper envelopes rather than

degradable plastic saving the equivalent of

1.4 million plastic bags.

We recognise that sustainability and ethical

behaviour is increasingly important to our clients

and we provide investment information, research

and guides on ethical investing within our

Responsible Investment section on the website.

Our ESG investment and engagement policies

can also be found here.

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BUILDING OUR POSITION AS A RESPONSIBLE BUSINESS CONTINUED

We believe in the transparency of data and

actions towards a climate resilient management

of our business. In part, this is to continually plan

and take action as a business by working with

changing regulatory policy. As such, we have

been disclosing to the Carbon Disclosure Project

(CDP) since 2018, we have included our TCFD

in this report and our Sustainability Accounting

Standards Board (SASB) report can be found on

our website. We collaborate with rating agencies

such as Sustainalytics and MSCI, which helps

highlight where we can improve. We aim to

continue to go the extra mile in this area and

increase our participation in forums and

industry collaboration.

HL is listed on the FTSE4Good index series,

demonstrating our strong environmental,

social and governance principles, having

been independently assessed according

to the FTSE4Good criteria.

Doing it better for our colleagues

We promote energy efficiency and the

avoidance of waste throughout our operations,

in accordance with our environmental policy.

• 100% of the general waste and packaging

disposed of in our head office is recycled.

We have implemented food waste recycling

across our offices.

• Our water usage by increased by 7.5%,

however, this was driven by increased numbers

of employees to work from our office as

opposed to home.

• Working alongside colleagues across internal

departments we are embedding sustainability

considerations within our return to the office

planning. This includes advocating for

employees to engage in sustainable behaviours

by providing the facilities within our office,

such as bicycle storage, free bicycle

maintenance checks and amenities such as

changing rooms to enable more sustainable

commuting. We recently increased the

allowance available for the Cycle to Work

Scheme and offer season ticket loans

for employees to use public transport.

We shred and recycle all confidential waste.

We save energy through the passive infrared

sensor lighting in our offices and we have a

number of initiatives internally to reduce our

paper use, with the ambition of being a paperless

office. These activities are supported by running

educational talks to promote recycling, from

external speakers such as City to Sea, Avon

Wildlife Trust and The Soil Association. We

donate old office and IT equipment to schools

and charities where appropriate or dispose of

via specialist third parties.

Our Financial Advisers are spread throughout

the UK which minimises travel time and carbon

emissions. We also provide a telephone advice

service where a face-to-face meeting is

not required.

For the year ending 30 June 2022 our

emissions per employee decreased by 20%.

Colleagues are passionate about working

together to ‘do it better’ and our Sustainability

Network is vital in helping us to achieve our

environmental aims. From promoting initiatives

to reduce our carbon footprint through talks,

events and written articles for staff, through

to introducing initiatives for waste reduction

and increasing climate-change awareness.

The Group are currently working on engaging

with communities on sustainability-related

issues through volunteering and, promoting

sustainable commuting habits with the aim

of coming back to the office greener.

Doing it better for the wider community

HL is part of a network of organisations that has

pledged to work towards a sustainable city with

a high quality of life for all, as demonstrated by

our membership of the Bristol Green Capital

Partnership. To support this, we source 100%

of our electricity from renewable sources.

HL colleagues also have the opportunity to

volunteer in projects which have a positive

impact on the environment. We recognise how

important biodiversity is for a healthy planet and

are working with local organisations to conserve

and maintain green spaces near to the office

such as the rewilding of College Green to help

promote biodiversity in the centre of Bristol,

tree planting and beach cleans.

We continue to work with TravelWest to support

their Travel to Work Survey so we can feed into

the city’s transport plans and provide more

accurate Scope 3 employee commuting data.

Online accounts

93%

of our clients

are registered for

online accounts

Paperless service

81%

of our clients now use

our paperless service

Recycling

100%

of the general waste

and packaging disposed

of in our head office

is recycled.

NET ZERO

We are committed to be

net zero by at least 2050

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BUILDING OUR POSITION AS A RESPONSIBLE BUSINESS CONTINUED

TCFD

We are committed

to becoming a more

sustainable business.

We are aiming to align with the global goals

of the Paris Agreement to limit global warming

to 1.5 degrees Celsius and aim to take

responsibility for how we manage the impact we

have on the environment and on climate change.

Our commitment to sustainability means

integrating social, ethical, and environmental

considerations into our operations with strong

corporate governance ensuring more sustainable

management and development with a long-term

view, in addition to our responsibility to manage

our wider environmental and social footprint.

Last year, we reported the significant step we

had taken of committing to achieve net zero

emissions no later than 2050 across our full

range of business operations. In 2022, we have

continued to develop our approach to this,

further refining our commitments, and going

into more detail around our investment data.

Our strategic objective is to reduce our

contribution to climate change and support

the transition to a low carbon economy. We are

aiming to limit our direct carbon impact, and

educate ourselves and our wider stakeholders,

including clients and shareholders, creating

environmental awareness and striving to live,

travel and work in a more environmentally

responsible manner.

Within our fund management we strive to

embed climate considerations in our investment

management and stewardship activity, with all

new HL funds EU SFDR Article 8 aligned at a

minimum, and supported by offering clients the

tools, information and research to invest in line

with their values.

The Task Force on Climate-related Financial

Disclosures (TCFD) seeks to improve and

increase the reporting of climate-related

financial information. We are pleased to present

our second report, covering HL Plc and its

operations, aligning to the recommendations

set out in the TCFD framework. We set out

below our climate-related financial disclosures

consistent with the all TCFD recommendations

and at least 9 out of 11 of the recommended

disclosures. By this we mean the four TCFD

recommendations and the 11 recommended

disclosures set out in Figure 4 of Section C

of the report entitled “Recommendations of

the Task Force on Climate-related Financial

Disclosures” published in June 2017 by the TCFD.

For strategy disclosure (a) and metrics and

targets disclosure (a), further work is planned to

enhance the identification, impact and reporting

for climate-related risks and opportunities and

how these map over the short, medium and

long term, in addition to further work on defining

the metrics used to assess these risks and

opportunities. We will continue to develop on this

report year on year and intend to include these

additions within the 2023 report. We will

continue to develop on this report year on year,

including adding greater detail on our fund

management process in future iterations.

Governance

Our Board of Directors oversee our long-term

strategy. This includes ESG, climate change

and sustainability.

They analyse progress with bi-annual board

papers, regular focused presentations, and

deep-dive sessions. This covers topics such

as the overarching ESG strategy, our approach

to risks and opportunities and how these

approaches feed into objectives. The Board

agrees the corporate objectives and approves

initiatives, such as our emissions targets, director

objectives and supporting our Group policies.

The Board takes collective responsibility for all

sustainability matters, encouraging collaboration.

In turn this will help drive change, and a more

sustainable future for our business and

our clients.

Our Executive Committee review an ESG

Dashboard on a quarterly basis, providing

them with updates on evolving ESG risk and

governance, our emissions data and client

attitude towards ESG. Additionally, our executive

compensation is linked to a number of ESG areas,

including our environmental goals, which can

be found on page 111 in the 2021 Report and

Financial Statements.

In 2021 we have had ESG sessions with

external consultancies to help build the working

knowledge of those involved within the ESG

arena. Day to day activities are coordinated and

driven through our ESG Taskforce and working

groups. This is made up of representatives across

the core strategy areas of responsible fund

management, fund research and analysis, client

proposition, compliance, product governance,

public affairs, and responsible business.

Our strategic objective is

to reduce our contribution

to climate change and

support the transition

to a low carbon economy.

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CORPORATE CITIZENSHIP

BUILDING OUR POSITION AS A RESPONSIBLE BUSINESS CONTINUED

This means colleagues from across the business

are working together to optimise climate-related

opportunities and minimising risks.

The HL Sustainability Group is an employee-led

network focusing on sustainability, with over

70 core members. The group is sponsored

by a senior executive and works to help us to

engage colleagues and support the business to

understand, measure and reduce our direct and

indirect environmental impact. Over the past year

the group have supported the work to return to

the office greener, with the installation of electric

vehicle charging points, improved cycling

facilities, transition of internal supplies to

sustainable alternatives and our food waste

recycling scheme.

Strategy

Whilst we are aware that changes required to

achieve a low carbon economy may present

some risks, we also believe that there are

opportunities for us and our clients during this

transition. We are committed to ensuring our

business operations are structured to ensure

we contribute to a low carbon based economy

as well as ensuring our clients have access to

the relevant tools, information and research

to make involved decisions on where to invest,

available on our Responsible Investment Hub.

www.hl.co.uk/funds/

responsible-investment

We have undertaken a scenario analysis, looking

at four scenarios for global warming, over two

different time frames. This helped to form the

foundations of our climate change strategy that

will ensure HL is a financially resilient business.

We have developed the analysis undertaken in

FY20, to include any other factors which have

arisen in the past year, such as implications

from COP 26, the Ukrainian war and subsequent

energy crisis. Additionally, our scenario analysis

includes more information on the impacts of

COVID-19 as more data is now available. This

includes research on the impacts of COVID-19

on the environment and socio-economic factors

such as business travel.

In our first scenario, climate action has been

prioritised and emissions significantly reduced

by 2030. As a result, global temperature

increases have been limited to 2°C or less.

Our second scenario is 2°C or less in 2050.

In the third, no climate action has been taken

by 2030 and global temperatures have risen

by 4°C or more. Lastly, this scenario has been

considered in 2050.

The qualitative and quantitative data enables a

consideration of the ‘what ifs’. These scenarios

will be assessed in terms of the risks,

opportunities, and the materiality in the next

steps of the TCFD process.

Unless stated otherwise, the data are

assumptions of what could be expected in the

scenario. Those that do not fit the time frames,

such as the ‘reputation’ analysis, are included

as they offer supporting evidence and an

understanding of the risk posed.

The scenario analysis will form the foundations

of a climate change strategy that will ensure HL

is a climate resilient business.

We have focused our scope on five key

risks, in line with TCFD recommendations.

1. Technology:

Climate change and resource scarcity are

linked. As a digital business, there’s a risk

the technology we use doesn’t use scarce

energy efficiently.

2. Policy and Legal:

With the transition to a lower carbon

economy, policies such as carbon-pricing

mechanisms and taxes could pose a risk

to our business.

3. Markets:

These disruptive policies could influence

financial markets. We have considered

this market risk having policy and legal

repercussions. In particular, the impact

of a shift away from fossil fuel investment.

4. Reputation:

How we participate in the transition

to a lower carbon economy could affect

our reputation.

5. Physical:

We have considered the chronic

physical risks of coastal flooding from

rising sea levels or riverine flooding risks,

as well as temperature rise implications.

Predicting socioeconomic development

is arguably more difficult than predicting

the long-term physical impacts of climate

change. To make sure our analysis was

broad enough, we applied a range of

existing models

to these five key risks.

We also looked at third-party research,

expert judgement, and internal stakeholder

focus groups.

1 Examples of models used; WRI Aqueduct Floods; Climate

Central Surging Seas; IAMC 1.5°C Scenario Explorer, IIASA;

PRI IPR and IEA.

We are committing

to achieve net zero

emissions no later

than 2050.

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BUILDING OUR POSITION AS A RESPONSIBLE BUSINESS CONTINUED

Risks and opportunities

We undertook an internal risk assessment using

scenario analysis on our operations. It found

the 2030 scenario for 2°C low risk, but then this

increased to medium risk for the 4°C scenario.

The 2050 scenario for 4°C was deemed to be

high risk. These risks were assessed via a

‘likelihood’ versus ‘impact’ matrix, offset against

controls to mitigate to help determine the risk

rating, for example a high risk has a high

likelihood and higher impact of causing a

significant event. The main risks were transitional

– market, regulatory and reputational risk.

We recognise the significance of global warming

and as a diversified financial institution, HL has

exposure to both physical and transition risks.

Despite a lack of direct exposure to climate-

related risks, a scenario like that articulated by

the Inevitable Policy Response (IPR) could impact

our future revenues and profits. As a result,

we have committed to aligning our business with

the global goal of achieving net zero by 2050.

Opportunities include:

• Increasing availability of energy efficient

technologies for example, cloud hosted

services could significantly reduce our

operational carbon footprint.

• Utilising business communication technology,

such as Teams and Zoom, to keep aspects

of remote working, limit business travel and

consequent emissions is also crucial here.

• As business travel across the industry has

not returned to pre-pandemic levels, there

is an opportunity to leverage technology,

limiting carbon and emissions under Scope 3.

There have been positive short-term impacts

on the environment from less commuting and

business travel. Our year on year Scope 2

emissions decrease for 2020-21 was well within

expected minimum levels. We are aware that

this could be partially due to COVID-19 and

the impacts of virtual work. Post-pandemic,

we will observe employee behaviours on

commuting and business travel. If this returns

to pre-pandemic levels, we will record this,

and revise our mitigation accordingly.

• The chance to enhance brand value through

robust reporting. Authentic targets will attract

and retain colleagues, clients and shareholders.

And we know that transparency drives

investor confidence.

• The Department for Business, Energy and

Industrial Strategy

(BEIS) stated the UK low

carbon economy could grow four times faster

than the rest of the economy between 2015

and 2030.

– We can support our clients to invest in this

area, through our Responsible Investing hub.

We have created a responsible investment

hub which makes it easier for clients to invest

in this area. Here, there is information about

ESG investing, tools and articles as well as

providing a list of funds in the responsible

investment sector.

– Furthermore, as announced earlier in the

year, we are launching a new Sustainable

Finance Disclosures Regulation Article 9

aligned fund over the coming years,

in addition to ensuring all additional new

funds are SFDR Article 8 as a minimum.

Risks:

In our original scenario analysis we assessed the

2°C and under 2050 scenario posed a medium

risk. Limiting temperature increases over the next

few decades will involve costs for businesses.

These might act as a drag on share prices and

could also impact economic growth compared

to the business as usual scenario. This shows

that climate action economic benefits

significantly outweigh the cost.

In the 4°C and above 2050 scenario, a significant

increase in energy demand is expected as a

result of rising water scarcity. We assessed this

was a high risk. Due to the misalignment with

the Paris agreement, reactive policies and taxes

could be implemented. In addition, increased

protests and citizen climate activism could be

targeted at FTSE 100 companies.

An overarching risk across all scenarios is the

reputational damage, which can in turn lead to

litigation risk. This could result from poor climate

risk management, misalignment with reporting

and ‘greenwashing’. We recognise the impact

this could have on relations with all of our

stakeholders. This is ever present, particularly

after COP 26 and the increase in green

investment products.

Hitting our climate-related targets is the key

to mitigating this risk. Our approach is to set

short-term targets to make sure we are on track

to meet long-term pledges. Within our operations

we have set a target to achieve by 2025,

before then looking to 2050, as stated here:

www.hl.co.uk/corporate-social-responsibility/

climate-commitments. We will follow the same

approach within our fund management, with

targets set by 2023. These will be reviewed

by our Board and driven by our ESG Taskforce.

We also need to consider demand for our

services if we don’t evolve to embrace ESG

investing. Likewise, consideration must be given

to the business’ growth rate and falling average

age of HL’s clients. The environment is one of

the top concerns

of millennials and Gen Z.

As the business’ youthful client base grows,

so do the expectations and scrutiny of our

climate action and we recognise the importance

of championing responsible climate action for

all current and future stakeholders.

Risk management

Climate change risk forms part of HL’s

Risk Universe. Each department within

the business has responsibility to identify

potential climate-related risks and implement

mitigating controls. Strategic implementation

of climate-related objectives are overseen

by the Executive Committee.

Emerging developments of climate related risks

are monitored through the Group’s Emerging

Risk and Horizon Scanning process. The

Executive Risk Committee and Board Risk

Committee receive quarterly updates on HL’s

emerging risks and the actions being taken

by Accountable Executives.

We continue to focus on strengthening our

management of climate-related risks making

these considerations a component of our

strategic planning process and executed through

strategic implementation. For example, the Funds

HL proposes to launch as part of its new strategy

place increased focus on ESG considerations

in their selection and management. HL has

assessed the financial impact of the risks and

the financial impact is not material. Over future

iterations we intend to develop our quantification

of these risks and add further analysis to the

financial impact.

2 HM Government 2017, “The Clean Growth Strategy”. 3 Deloitte 2020, “The Deloitte Global Millennial Survey 2020”.

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CORPORATE CITIZENSHIP

BUILDING OUR POSITION AS A RESPONSIBLE BUSINESS CONTINUED

Risk Impact identified Mitigation

Transition

Technology • The link of climate change and resource scarcity is becoming increasingly

apparent, for example, droughts and heatwaves will make the water needed to

produce electricity scarce. As a digital business, we are aware of the risk of not

having the right technology to manage energy scarcity.

• The ongoing energy crisis is resulting in increasing costs for running a digital

business due to material infrastructure.

• We intend to undertake work to understand the potential technology risks within

our portfolio.

• Whilst there is a risk of not having sufficient technology to manage energy

scarcity, in addition to considering unsuccessful investment in new technology

& costs to transition to lower emission technology we believe this is a low risk in

the short term but poses a higher risk over the long term in a 4 degree scenario.

The risk of energy scarcity is being managed through the transition to cloud hosted

services, such as Amazon Web Services (AWS). Using the cloud means fewer

servers are needed and less energy used. HL is transitioning to using AWS systems,

for which Amazon claims the AWS’s infrastructure is 3.6 times more energy efficient

than the median of the surveyed US enterprise data centres, delivering a 72%

reduction in carbon footprint on average. As this transition has been confirmed,

HL could expect increased energy efficiency by 2030. Coupled with our investment

in cloud-based services is our exploratory work into how we can deploy artificial

intelligence to enhance efficiencies.

We’re also improving the energy efficiency of our operations through conscious

switches, such as installing LED lighting in our offices. Between 2015 and 2020

we’ve reduced the energy (kWh) we use per client by 57.9%.

Due to virtual working, people are commuting less which leads to less emissions.

Following the pandemic, a YouGov poll found that 34% of UK respondents

stated environmental sustainability affects their decisions around travel. In the

UK there has been a 142% increase in hybrid working. It was also found that

42% of people would not return to business travel such as business trips and

client meetings, choosing instead to hold them virtually. This has created an

opportunity to reduce Scope 2 emissions, especially in the short-term. The effects

on emissions are potentially long-term depending on the evolution of these social

behaviours and attitudes to business travel.

Policy

and legal

• With the transition to a lower carbon economy, we have recognised the risk that

reactive policies could have to HL, such as carbon-pricing mechanisms to reduce

GHG emissions, and associated taxations.

• As regulatory requirements inevitably increase as new policies are introduced,

additional costs needed to adapt to these should also be considered.

• There are a number of legislative reporting changes due (such as SDR, TCFD,

new ISSB Reporting standards) and failure to align to and report against these

will result in negative impacts, both financially and reputationally.

We scan the horizon for policy and legal risks associated with climate change.

We screen regulatory press releases, consultations and publications to spot

potential changes that could impact our operations. Through this process,

risks are assessed in terms of impact.

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CORPORATE CITIZENSHIP

BUILDING OUR POSITION AS A RESPONSIBLE BUSINESS CONTINUED

Risk Impact identified Mitigation

Transition

continued

Market • These disruptive policies could also pose a risk to financial markets. We have

considered this market risk from the perspective of policy and legal repercussions,

in particular, looking at the impact of a shift from fossil fuels. Also, how the

demand for fossil fuels has changed due to socioeconomic behaviours and

attitudes following the pandemic.

• The Ukraine crisis and the intent to replace Russian oil has led to many countries

turning to coal (www.climatechangenews.com/2022/03/15/some-eu-members-

turn-back-to-coal-to-cut-reliance-on-russian-gas/) or imports of liquefied

natural gas (www.oilprice.com/Energy/Energy-General/Shale-CEO-US-Can-

Easily-Replace-Russian-Gas.html) as alternative sources to close the gap short

term. This presents a risk to the decarbonisation transition.

• Carbon markets recognised at COP26 which can open new revenue streams.

This has an impact on financials of putting an explicit price on carbon emissions,

and the knock on effect that can have to listed companies and the market.

• This could pose a low risk over the short term due to reactive policies listed

and impact on the markets, resulting in increasing risk over the longer term

Disruptive policies and the subsequent shift away from fossil fuels poses a risk to

client outcomes, for example to meet the 1.5 degrees target, phase-down of coal

is required per United Nations COP26. We mitigate this risk by creating content

that educates our clients on the importance of diversifying their investments.

Diversification is a key part of building resilience into a portfolio and we offer clients

the opportunity to save and invest in a large selection of assets.

We have six responsible funds on the Wealth Shortlist currently, in addition to the

nineteen new funds which will be launched that are EU SFDR article 8 aligned at

a minimum and have launched our Responsible Investment Hub to provide clients

with the tools and research to invest in line with their preferences.

We are aware of the risk of portfolio exposure and risk management and are

exploring tools to help identify our transition risks and to support client decision

making. Within our Fund Management we integrate ESG factors into our portfolios

and have an ESG proprietary dashboard to support our analysis.

Reputation • The Task Force has recognised climate change as a potential source of

reputational risk in terms of an organisation’s contribution to, or detraction from,

the transition to a lower carbon economy. We have focused on the risk of a

misalignment between reporting and HL’s actions.

• This could pose a short term, lower impact risk than the previous risks covered

A robust and transparent climate strategy will help mitigate the reputational impact

stemming from climate inaction. This includes ensuring any promotion of funds is

accurate and do not lead to claims of greenwashing which would have a negative

impact on reputation.

Physical

Physical • Physical risks resulting from climate change can be event driven (acute)

or longer-term shifts (chronic) in climate pattern.

• We have considered the chronic risk of coastal flooding from rising sea levels

or riverine flooding risks, as well as temperature rise implications.

• The Intergovernmental Panel on Climate Change (IPPC) report notes that climate

change interacts with global trends such as unsustainable use of natural

resources, growing urbanisation, social inequalities, loss and damage from

extreme events and a pandemic, jeopardising future development.

• Whilst there is an increasing risk of the physical impact of climate change over

the longer term, it was deemed as lower risk due to the smaller impact it would

have on our physical operations

As part of our business continuity plans, we consider the effects of adverse

weather. We have plans and playbooks for incidents such as flooding. These plans

also include annual due diligence of our suppliers, including climate-related risks.

In terms of flooding, Bristol City Council’s flood zone planning encompasses our

core Harbourside office. Insurance is also in place for further protection.

Temperature rise is mitigated through the installation of improved cooling systems

that reduces the overheating of our core technology systems and server rooms.

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Strategic report

Metrics & Targets

Targets are a means to ensure we are on track to

meet our long-term goals. We continue to adjust

our targets on an annual basis to keep the aims

ambitious. We aim to set a science-based net

zero target within the next year. With regard to

operational emissions, HL commits to:

• Reduce our Scope 1* and 2* emissions by

15% (relative to baseline year FY18) each year.

• Measure and report all material Scope 3*

emissions by 2023 – primarily focusing on

our financed emissions which account for

the majority of our emissions, and emissions

which account for at least 50% of the total.

• 20% reduction in tonnes of CO

e for Scope 1+2

emissions per average full-time equivalent

employee each year (relative to baseline

year FY16).

• 100% of the general waste and mixed recycled

packaging disposed of in our head office is

recycled. We are working to expand this to

include our food waste by 2022.

Since 1 October 2013, the Companies Act 2006

(Strategic Report and Directors’ Report)

Regulations 2013 has required all UK quoted

companies to report on their greenhouse gas

emissions as part of their annual Directors’ Report.

We have reported on all of the emission sources

required under the Companies Act 2006 (Strategic

Report and Directors’ Report) Regulations 2013.

We also support the Carbon Disclosure Project

by reporting our CO

emissions.

Scope 1 is calculated by taking the invoice

consumption data (in KwH) from our Gas supplier

and refrigerant gas data multiplied by the UK

Government GHG conversion factors.

Scope 2 is calculated by taking the invoice

consumption data (in KwH) from our Electricity

supplier multiplied by the UK Government GHG

conversion factors.

Scope 3 Business travel is calculated by taking

colleague expense claim data multiplied by

emission factor data. Employee commuting is

calculated using Travel West ‘travel to work

survey data’ and average distances travelled,

multiplied by emission factor data, the

percentage of colleagues working from home

is also factored in. There has been an increase

in Scope 3 emissions in FY22 as a result of

COVID-19 restrictions being lifted and more

people returning to the office and carrying out

business travel.

We do not have responsibility for any emission

sources that are not included in our consolidated

statement. Our emissions are calculated in line

with the Greenhouse Gas Protocol using the

2021 emission factors provided by DEFRA.

The Group’s Scope 1, 2 and 3 emissions for the

year to 30 June 2022 are set out in the table

below. Scope 1 emissions relate to the Group’s

fugitive emissions from the combustion of fuel

and operating activities and Scope 2 emissions

relate to the Group’s electricity usage. Scope 3

emissions relate to business travel and employee

commuting. The table also shows the Group’s

energy usage arising from the gas and electricity

purchased for and used in operating its premises,

using the operational boundary definition.

Greenhouse gas emissions statement

In order to provide an intensity ratio for our

emissions disclosure, we have calculated

our greenhouse emissions per employee.

The Directors believe that the number of

employees is the best indicator for a Group

of this size and nature for the purposes of this

disclosure. The number of employees used

is the average number of full-time equivalent

employees over the measurement period.

For the year ending 30 June 2022 our emissions

per average employee was 0.71 tonnes down

20% on the prior year (2021: 0.89). The average

number of employees for the year was 1,984

(2021: 1,776).

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Emissions from:

Tonnes of CO

Change

Current

reporting year

2021-2022

Comparison

year

2020-2021

Direct emissions Scope 1 – Combustion of fuel and

operations of facilities including air conditioning 942.1 975.5 -3%

Indirect emissions Scope 2 – Purchased energy for own use 476.1

672.1

-29%

Tonnes of CO

e per average full-time equivalent employee 0.71 0.89 -20%

Energy used (KwH) 3,851,381

4,446,733

-13%

Scope 3 – Business travel 29.9 0.6 +4,902%

Scope 3 – Employee commuting 404.0 193.3 +109%

1 The purchased energy for own use figure includes 34.9 Tonnes of CO

emissions (30.8 T, 2021) relating to our operations in Poland.

It is not feasible to split any other metrics by country.

2 The energy used figure includes 180,594 KwH (145,092 KwH, 2021) relating to our operations in Poland. It is not feasible to split any other

metrics by country.

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CORPORATE CITIZENSHIP

BUILDING OUR POSITION AS A RESPONSIBLE BUSINESS CONTINUED

Net zero

HL recognises the significance of net zero,

transparent disclosures and authentic pledges

to allow for a sustainable economy. We are proud

to support the transition to carbon neutrality

by committing to net zero and publishing our

TCFD assessment of climate-related risks and

opportunities for our operations. We recognise

that the hard work starts here in evolving

our business to embed climate-related risk

management, continue to refine and expand

our disclosures, and focus on reducing HL’s

environmental footprint.

We are committing to be carbon neutral across

our Scope 1, 2 and Scope 3 business travel and

employee commuting emissions by 2025. We are

using the term ‘carbon neutral’ as we recognise

that we may need to utilise carbon offsetting as

part of our commitment and without the certainty

that we won’t use them, we do not want to

mislead with our commitments. This pledge

complements the City of Bristol’s 2030 net zero

target, allowing HL to champion our community’s

green growth. This will be met through a

combination of internal reduction methods

and a portfolio of carbon removal and reduction

projects. We commit to be net zero across all

of HL operations emissions (including Scope 3

financed emissions) by at least 2050 and will

seek accreditation for this via the science based

target initiative, in accordance with the Paris

Agreement by 2024 at the latest.

This is for HL plc.; we intend to disclose targets

for HLFM and HLAM in the near future.

To read more about our ambitions,

please refer to our climate commitments

web page www.hl.co.uk/

corporate-social-responsibility/

climate-commitments

*Definition of terms used:

Scope 1 and 2 are those emissions that are

owned or controlled by a company, whereas

scope 3 emissions are a consequence of the

activities of the company but occur from sources

not owned or controlled by it.

Scope 1 emissions: emissions from sources

that an organisation owns or controls directly.

Scope 2 emissions: emissions that a company

causes indirectly when the energy it purchases

and uses is produced.

Scope 3 emissions: emissions that are not

produced by the company itself, and not the

result of activities from assets owned or

controlled by them, but by those that it’s

indirectly responsible for, up and down its

value chain. An example of this is when we buy,

use and dispose of products from suppliers.

Scope 3 emissions include all sources not within

the scope 1 and 2 boundaries.

Governance Financial statements Other information

Hargreaves Lansdown

Report and Financial Statements 2022

Strategic report

CORPORATE RESPONSIBILITY

CORPORATE CITIZENSHIP

NON-FINANCIAL INFORMATION STATEMENT

Reporting requirement Policies and standards which govern our approach Where you can find out more

Environmental

matters

Our report on Corporate Citizenship sets out our approach and policy in respect of the environment,

sustainability and climate change and provides examples of the action we are taking to promote energy

efficiency and reduce waste. It also provides details of our energy consumption and greenhouse gas emissions.

The environment, sustainability

and climate change and

Greenhouse gas emissions

pages 35 to 43.

Employees

Our people strategy aims to motivate and inspire colleagues to reach their full potential and our people policies

are in place to attract and promote an inclusive, diverse and healthy workforce.

Our report on Corporate Citizenship sets out our approach and the policies that support it.

This includes how we aim to attract and retain outstanding people, our commitment to personal development

of colleagues to expand our talent pipeline, and how we engage with colleagues and support their well-being.

We are committed to building a diverse workforce at all levels and creating an inclusive culture for all.

Our report on Corporate Citizenship sets out how we are doing this, and further information on our policies

to promote diversity and inclusion can be found in the Nomination Committee Report.

Employees pages 26 to 30.

Nomination Committee Report

page 107.

Social

Our report on Corporate Citizenship provides details of our approach to supporting our community. There you

can read more on our approach and the policies, schemes and initiatives that support it. You can also find

information on how our tax strategy supports our role as a business responsibly operating in and contributing

to society.

Community and Tax Strategy

pages 33 to 34.

Respect for

human rights

We are committed to supporting the rights of individuals and our people policies promote and support the

protection of the rights of our colleagues. We have a zero tolerance approach to slavery and human trafficking

of any kind within our business operations and supply chain. You can read more on our approach and the

policies in place to support it in the People section of this report.

Employees and Human Rights

page 30.

Anti-corruption

and anti-bribery

We have a full suite of policies and procedures in place to guard against financial crime, including bribery

and corruption, money laundering and terrorist financing, market abuse and fraud. You can read more about

our approach and the policies in place to support it in the People section of this report.

Anti-bribery and corruption

page 30.

Additional information Page

Description of principal risks and impact of business activity Principal risks and uncertainties, conduct risk (client outcomes)

and operational risk (financial crime)

51 to 59

Description of the business model Business model 22 to 23

Non-financial key performance indicators Strategy and KPIs 12 to 17

As a FTSE 100-listed business, we have an

important responsibility to contribute to the

communities around us and the wider economy.

We focus on driving high levels of corporate

responsibility, governance and sustainability and

look to engage with a wide range of stakeholders

in order to help create value for all. This section

of the Strategic Report constitutes the Group’s

Non-Financial Information Statement for the

purposes of sections 414CA and 414CB of the

Companies Act 2006. The information listed is

incorporated by reference.

The Strategic report was approved by the Board

of Directors and signed on its behalf by:

Chris Hill

Chief Executive Officer

Governance Financial statements Other information

Hargreaves Lansdown

Report and Financial Statements 2022

Strategic report

PERFORMANCE

OPERATING AND FINANCIAL REVIEW

INVESTING FOR

FUTURE GROWTH

Strategic investment programme

underway to deliver improved operational

efficiency and growth potential.

Assets Under Administration (AUA)

and Net New Business (NNB)

Year ended

30 June 2022

£bn

Year ended

30 June 2021

£bn

Opening AUA 135.5 104.0

Underlying NNB 5.5 8.7

Market movement and other (17.2) 22.8

Closing AUA 123.8 135.5

Hargreaves Lansdown provides the leading direct wealth

management service in the UK. The strength of our brand,

diversified offering and the quality of our client engagement

and service has enabled us to continue to deliver net new clients

and net new business growth in a somewhat turbulent year.

Net new business for the year totalled £5.5 billion (2021: £8.7bn)

driven by increased client numbers, continued wealth consolidation

onto our platform and inflows from existing clients. The prior year

comparative saw the benefit of net new business and net new

clients resulting from the announcement of the Pfizer vaccine

and the optimism that brought to both clients and markets more

broadly. The lockdown months in early 2021 also saw significant

inflows as clients were predominantly home based with more time

to open accounts, transfer investments, undertake trading activity

and add money to the platform that was not being spent

elsewhere. This year instead, investors have faced uncertainties

caused by issues not seen for a generation with war in Europe,

significant cost inflation, rising interest rates and continued

macroeconomic uncertainty weighing heavily on consumer

confidence which hit an all-time low in June of this year and in turn

impacting net new business. Throughout the period, however, we

have maintained our focus on engaging with clients and helping

them to navigate these uncertain times, to improve their financial

awareness and resilience. This, combined with the quality of

service and breadth of proposition is key to building long-term

client relationships. Our focus on service and the value our clients

place on our offering is evidenced by client and asset retention

rates remaining strong at 92.1% and 91.8% respectively (2021:

92.1% and 91.4%).

During the year to 30 June 2022, we introduced 92,000 net new

clients (2021: 233,000) to our services and grew our active client

base by 6% to 1,737,000. The average age of new clients at 36

years old, is consistent with recent periods and they are behaving

similarly to recent equivalent cohorts in terms of growing their AUA

on the platform over time, diversifying their portfolios and using

the tax wrapped accounts. We are encouraged by the qualitative

aspects of these clients and the additional lifetime value they will

bring to the Group as a result. On joining, new clients brought an

average NNB of £15,565, up 12% on last year (2021: £13,943).

Our client focused strategic

investment underpins our

future growth.

Amy Stirling

Chief Financial Officer

Governance Financial statements Other information

Hargreaves Lansdown

Report and Financial Statements 2022

Strategic report

PERFORMANCE

OPERATING AND FINANCIAL REVIEW CONTINUED

Financial performance

Income Statement

Year ended

30 June 2022

£m

Year ended

30 June 2021

£m

Revenue 583.0 631.0

Fair value gains on derivatives – 0.6

Operating costs (313.0) (266.0)

Finance and other income – 1.4

Finance costs (0.8) (1.0)

Profit before tax 269.2 366.0

Tax (53.4) (69.7)

Profit after tax* 215.8 296.3

Profit before tax 269.2 366.0

Total strategic spend

– Investment cost 21.1 –

– Dual tech running cost 7.2 –

Underlying profit before tax* 297.5 366.0

Tax on underlying profit* (59.0) (69.7)

Underlying profit after tax* 238.5 296.3

* Underlying profit before tax, Tax on underlying profit, and Underlying profit after tax for

the period exclude strategic investment costs and dual tech running costs of £28.3 million.

See the Glossary of alternative performance measures on page 168 for the full definition.

Prior period comparatives are provided on the same basis as they were reported prior to

the introduction of the new alternative performance measures.

Revenue

Revenue for the year was £583.0 million, down 8% (2021: £631.0m), driven by lower share dealing volumes as anticipated given the more

atypical trading volumes experienced during COVID-19 last year. This was partly offset by higher average asset values in the first half

and the benefit that brings in higher platform fees.

The table below breaks down revenue, average AUA and margins earned during the period.

Year ended

30 June 2022

Year ended

30 June 2021

Revenue

£m

Average

AUA

£bn

Revenue

margin

bps

Revenue

£m

Average

AUA

£bn

Revenue

margin

bps

Funds

254.5 65.3

39 232.9 58.5

194.9 52.3 37 258.0 45.1 57

Cash

50.0 13.6 37 50.7 13.0 39

HL Funds

60.3 8.8

69 60.7 8.4

Other

23.3 3.8

– 28.7 2.8

–

Double-count

– (8.7)

– – (8.3)

–

Total 583.0 135.1

– 631.0 119.5

–

1 Platform fees and renewal commission.

2 Stockbroking commission and equity holding charges.

3 Net interest earned on client money.

4 Annual management charge on HL Funds, i.e. excluding the platform fee, which is included in revenue on funds.

5 Advisory fees, Active Savings and ancillary services (e.g. annuity broking, distribution of VCTs and Hargreaves Lansdown Currency and Market Services).

6 Average cash held via Active Savings.

7 HL Funds AUM included in Funds AUA for platform fee and in HL Funds for annual management charge. Total average AUA excludes HL Fund AUM to avoid double-counting.

Funds

Revenue on Funds increased by 9% to £254.5 million (2021:

£232.9m) due to higher average AUA levels. Funds remain our

largest client asset class at 48% of average AUA (2021: 49%),

and the revenue margin earned this year was in line with our

expectations at 39bps (2021: 40bps). Funds AUA at the end

of June 2022 was £58.2 billion (2021: £66.6bn).

We expect the fund revenue margin to remain at broadly similar

levels for the next financial year, within the range of 38.0bps

to 39.0bps.

Revenue on Shares decreased by 24% to £194.9 million (2021:

£258.0m) and the revenue margin of 37bps (2021: 57bps) was

within our expected range. This margin is primarily a result of the

ratio of dealing volumes to average AUA. In the year client driven

deal volumes fell by 32% to 8.9 million (2021:13.1m), whereas the

average Shares AUA has grown by 16%. Within this decrease

overseas deal volumes, which derive greater revenues were down

41%. The drop in deal volumes and revenues year on year primarily

relates to the significant boost seen last year on the back of Pfizer

announcing the success of their vaccine trials in November 2020

and the elevated deal volumes during the lockdown months of

January 2021 to March 2021.

Governance Financial statements Other information

Hargreaves Lansdown

Report and Financial Statements 2022

Strategic report

PERFORMANCE

OPERATING AND FINANCIAL REVIEW CONTINUED

Total deal volumes (including automated deals such as dividend

reinvestment) decreased by 27% to 10.5 million (2021: 14.4m) but

were in line with expectations of c40,000 deals per trading day,

albeit from a peak in January of 46,000 deals per trading day

driven by market volatility to a low in June of 37,000 as a result

of low levels of investor confidence and a lack of market stimulus.

Despite the more recent reduction in volumes, client driven trading

remains ahead of levels seen prior to the pandemic. We are well

placed to benefit from future market volatility and growth in share

trading across the industry. However, we expect to see these

more muted volumes continue through much of the year ahead.

We remain the market leader in terms of UK stockbroking volumes

with a 38.2% share (source: Compeer Limited XO Quarterly

Benchmarking Report Q1 2022). Shares AUA at the end of 2022

was £45.9 billion (2021: £53.1bn).

Our revenue margin guidance for the next financial year on shares

is 35bps to 40bps.

Cash

Revenue on Cash was broadly flat at £50.0 million (2021: £50.7m)

as higher average cash levels were more than offset by a decrease

in the net interest margin to 37bps (2021: 39bps) slightly above

the top end of our communicated expectations. With the majority

of SIPP cash placed on rolling 13 month term deposits, and

non-SIPP on terms of up to 95 days, the full impact of any rate rise

or fall takes over a year to flow through. Cash AUA at the end of

2022 was £15.0 billion (2021: £12.6bn).

As we progressed through the first half of our year, expectations

of an interest rate rise gained momentum until 16 December 2021

when the Bank of England raised interest rates for the first time

in three years from 0.10% to 0.25%. In the second half we have

seen four subsequent increases, each of 0.25%, in February,

March, May and June. The extent of pass through by us to

clients is determined by the rates we are able to achieve with our

relationship banking partners who we assess based on the criteria

of security, liquidity and yield. Assuming there are no further rate

changes, our guidance for this financial year is 90bps to 110bps.

HL Funds

HL Funds consist of 10 Multi-Manager funds, on which the

average management fee ranges from 60bps to 75bps, three

Select equity funds, on which the management fee is 60bps

and our new Workplace Default Fund ‘HL Growth Fund’, on

which the management fee is 10bps. Although the average funds

under management were up 5% versus last year, revenue from

HL Funds was broadly flat at £60.3m (2021: £60.7m) as previously

announced price cuts took effect from 28 June 2021. These price

cuts were initially announced in January 2021 as part of the annual

Value for Money report on our own fund range and included cuts

to the annual management charge on some of the Multi-Manager

funds and the introduction of price reductions linked to economies

of scale. The fees are collected on a daily basis whereas the

Group calculates average AUM on a month end basis, resulting

in a headline margin for the period of 69bps (2021: 72bps).

Overall, we have seen modest net outflows combined with

negative market growth such that HL Funds AUM at the end of

2022 was £8.0 billion (2021: £9.0bn). The net outflows primarily

relate to our advisory clients who hold these funds through

our Portfolio Management Service, which we have not been

actively marketing.

Looking forward, we are launching a range of new HL Funds along

with new investment tools and solutions. This will improve the

overall proposition and competitiveness of our own investment

funds and will begin to drive net inflows. We expect to launch

new funds with lower priced management fees than the existing

Multi-Manager funds and will be moving certain existing HL

Multi-Manager funds into the new lower priced funds. The margin

for 2023 is therefore expected to reduce and be in the range of

55bps to 60bps

Other

Other revenues are primarily made up of advisory fees and Active

Savings. The year on year reduction of revenue primarily relates

to the removal of our paper based statement fees during the year.

Overall, we expect our revenue margin to be in the range of 44bps

to 47bps for the full year.

Active Savings

Assets held within Active Savings on the platform continue to

grow and are shown in the previous table as ‘Other’. Whilst growing,

the related revenue is not yet material so has been included with

various other revenue streams in the same table. Our focus is on

growing Active Savings cash balances through both attracting

new clients and retaining cash assets on the platform. In the last

quarter of the financial year, following the base rate increases,

we have usually been able to offer market leading rates from our

growing range of partner banks. Combined with marketing Active

Savings for the first time, we have seen a significant step up in

flows towards the end of the year. Active Savings AUA at 30 June

2022 was £4.6 billion (2021: £3.1bn).

Governance Financial statements Other information

Hargreaves Lansdown

Report and Financial Statements 2022

Strategic report

PERFORMANCE

OPERATING AND FINANCIAL REVIEW CONTINUED

Revenues

Year ended

30 June 2022

£m

Year ended

30 June 2021

£m

Ongoing revenue* 414.1 390.5

Transactional revenue* 168.9 240.5

Total revenue 583.0 631.0

* Definitions are shown in the Glossary of alternative financial performance measures

on page 168.

The Group’s business model offers clients a broad range of asset

classes to suit their needs in differing market environments and

as such benefits from a diversified revenue stream. The Group’s

revenues are largely ongoing in nature, as shown in the table

above. The proportion of ongoing revenue has increased to 71%

(2021: 62%) as the transactional stockbroking commission

decreased significantly versus last year.

Ongoing revenue is primarily comprised of platform fees on funds

and equities, Hargreaves Lansdown fund management fees,

interest on client money and ongoing advisory fees. It increased

by 6% to £414.1 million (2021: £390.5m) driven by higher revenues

on funds from higher average AUA levels in the first half of the year.

Transactional revenue is primarily made up of stockbroking

commission and advisory event-driven fees. This decreased by

30% to £168.9 million (2021: £240.5m) with a 32% decrease in

client driven equity deal volumes being the driver of this revenue.

Operating Costs

As set out at the Capital Markets Day in February this year,

we have embarked on an investment programme to support

the strategic initiatives which will drive improved client

experience, enable growth at scale without the need for ongoing

commensurate increases in operating costs and expand our client

proposition by evolving our Investment Solutions, Active Savings

and Advice capabilities to meet the increasing needs of our current

and future clients.

The investment programme drives incremental spend over this

year and over the next three years through both investment cost

and dual tech running costs, together Total Strategic Spend.

Operating costs

Year ended

30 June 2022

£m

Year ended

30 June 2022

£m

Year ended

30 June 2022

£m

Year ended

30 June 2022

£m

Year ended

30 June 2022

£m

Year ended

30 June 2021

£m

Underlying cost

Total strategic spend

Operating cost Operating costInvestment Cost

Dual Tech

running costs Total

Staff costs (including contractors) 144.2 6.3 5.0 11.3 155.5 119.8

Marketing and distribution costs 25.8 – – – 25.8 28.3

Depreciation and amortisation 16.1 – – – 16.1 16.2

Activity costs* 24.6 – – – 24.6 35.6

Technology costs* 28.7 – 1.0 1.0 29.7 22.8

Legal and professional costs 17.1 14.8 1.2 16.0 33.1 16.7

Other costs 16.1 – – – 16.1 12.7

Total costs (pre-FSCS) 272.6 21.1 7.2 28.3 300.9 252.1

Total FSCS levy 12.1 – – – 12.1 13.9

Total operating costs** 284.7 21.1 7.2 28.3 313.0 266.0

* Definitions are shown in the Glossary of alternative financial performance measures on page 168.

** Underlying costs excludes £28.3 million of strategic investment costs. See the Glossary of alternative performance measures on page 168 for the full definition.

Prior period comparatives are provided on the same basis as they were reported prior to the introduction of the new alternative performance measures.

They are used as the comparative reference points in the discussion on cost performance below.

Underlying costs increased by 7% to £284.7 million (2021:

£266.0m) as we continued to support the growing client base

and delivered an improved client service. The average number

of clients across the period was 11% higher than in 2021.

The key driver of cost growth was staff costs, which rose by 20%

to £144.2 million (2021: £119.8m). Average staff numbers, including

contractors, increased by 15% from 1,839 in 2021 to 2,109 in 2022.

The increase was predominantly within the service functions of

helpdesk and operations as they support our growing client base,

plus compliance and risk. Salary inflation had an impact of c3%.

Marketing and distribution costs fell by 9% to £25.8 million

(2021: £28.3m). During the period we were more targeted with our

client acquisition spend and we spent less on cash back transfer

incentives having focused instead for the year on improving our

transfer processes. As usual, marketing activity increased in the

second half and through the tax year end, including the third year

of our brand marketing campaign as ‘Switch your money on’.

Relating to the underlying operations of the business, capitalised

expenditure was £8.1 million (2021: £17.8m). The majority of this

expenditure was for cyclical replacement of IT hardware, office

equipment and the ongoing development of Active Savings.

Depreciation and amortisation costs decreased by £0.1 million.

Activity based costs primarily include dealing related costs and

debit card fees linked to cash paid onto the platform. Overall they

fell by 31% to £24.6 million (2021: £35.6m) driven by a 27%

reduction in share dealing volumes.

Governance Financial statements Other information

Hargreaves Lansdown

Report and Financial Statements 2022

Strategic report

PERFORMANCE

OPERATING AND FINANCIAL REVIEW CONTINUED

Technology costs increased by 26% to £28.7 million (2021:

£22.8m). This was driven by increased licence fees to support

colleague numbers along with further spend incurred in providing

our proposition.

Legal and professional fees were broadly flat at £17.1 million

(2021: £16.7m) reflecting the cost of operating in a highly

regulated environment.

Other costs increased £3.4 million to £16.1 million (2021: £12.7m).

The key drivers of this were increased office running costs as

we faced higher energy costs, increased insurance costs and

travel expenses.

Total strategic spend to date primarily comprises staff (including

contractor) costs and professional fees relating to the planning

and commencement of the digital technology strategy and

strategic growth initiatives along with associated compliance,

infrastructure and support costs. In addition, in order to provide

assurance for our clients as we go through our transformation,

we will be parallel running new and legacy technology and

therefore have incurred dual tech running costs. Overall the

total strategic spend for the year was £32.9 million of which

£28.3 million has been expensed in the year (£21.1m investment

cost and £7.2m dual tech running costs) and £4.6 million has been

capitalised and will be amortised and depreciated in accordance

with our existing accounting policy.

Looking ahead to financial year 2023, our underlying costs have

come in lower than guidance for FY22, which combined with the

impact of wage inflation means we now expect to see growth of

c9.5% to 11.5% in the year ahead which is lower in absolute terms

than previously guided as we focus on managing spend. We

expect our strategic investment spend to be c£65 to £75 million,

catching up on the slightly slower start in FY22 of which c60% will

be capitalised. The amortisation and depreciation costs relating to

our strategic spend are included in the above cost guidance on

underlying costs. In addition, we expect to incur c£20 million of

dual running costs relating to the parallel running of technology

systems in the next financial year.

It is anticipated that the strategic investment cost and dual tech

running costs will continue until the financial year ending June

2026. In order to provide clarity of business performance, the

Total Strategic Spend (comprising investment cost and dual tech

running costs) will be added back to statutory profit before tax

to form an underlying profit before tax measure.

The Financial Services Compensation Scheme (FSCS) levy

decreased by £1.8 million to £12.1 million (2021: £13.9m) as the

overall amount raised under the scheme this year was lowered.

The FSCS is the compensation fund of last resort for customers of

authorised financial services firms. All authorised firms are required

to contribute to the running of the scheme and the levy reflects

the cost of compensation payments paid by the industry in

proportion to the amount of each participant’s relevant eligible

income. At present we anticipate that this levy will continue at

a similar level.

Profit before tax

Hargreaves Lansdown’s success is built around delivering

high service standards, efficiently dealing with ever growing

volumes of business and investing in further growth opportunities.

This investment is key to driving future growth and ensuring we

have a scalable operating platform, which we believe will be to

the benefit of both clients and shareholders across the market

cycle. At our Capital Markets Day, we outlined the improvements

to our client service and proposition, the improvements to our

efficiency and the cost savings the strategic investment will

deliver. This strategic investment has already begun and these

costs incurred in the year are in addition to the business as usual

or underlying costs of the business. The table below reconciles

the underlying profit before tax to the statutory profit before tax.

On an underlying basis, profit before tax fell by 19% to £297.5 million

(2021: £366.0m). On a statutory basis profit before tax fell by 26%

to £269.2 million (2021: £366.0m).

Tax

The effective tax rate for the period was 19.8% (2021: 19.1%),

in line with the standard rate of UK corporation tax. The Group’s

tax strategy is published on our website at www.hl.co.uk

Earnings per share

Year ended

30 June 2022

£m

Year ended

30 June 2021

£m

Operating profit 270.0 365.6

Finance income – 1.4

Finance costs (0.8) (1.0)

Profit before tax 269.2 366.0

Underlying profit before tax* 297.5 366.0

Tax 53.4 (69.7)

Profit after tax 215.8 296.3

Tax on underlying profit* (59.0) (69.7)

Underlying profit after tax* 238.5 296.3

Weighted average number of shares

for the calculation of diluted EPS 474.5 474.5

Diluted EPS (pence per share) 45.6 62.5

Underlying diluted EPS

(pence per share)* 50.4 62.5

* Underlying profit before tax, Tax on underlying profit before tax, Underlying profit after tax

and Underlying diluted EPS for the period exclude strategic investment costs of £28.3 million.

See the Glossary of alternative performance measures on page 168 for the full definitions.

Prior period comparatives are provided on the same basis as they were reported prior to the

introduction of the new alternative performance measures.

Diluted EPS decreased by 27% from 62.5 pence to 45.6 pence,

in line with the Group’s reduction in profits. The Group’s basic EPS

was 45.6 pence, compared with 62.6 pence in 2021. Underlying

diluted EPS decreased by 19% from 62.5 pence to 50.4 pence.

The Group’s underlying basic EPS was 50.4 pence compared to

62.6 pence (see Glossary of alternative performance measures

on page 168 for the full definition).

Governance Financial statements Other information

Hargreaves Lansdown

Report and Financial Statements 2022

Strategic report

PERFORMANCE

OPERATING AND FINANCIAL REVIEW CONTINUED

Capital and liquidity management

Hargreaves Lansdown looks to create long-term value for

shareholders by balancing delivery of profit growth, capital

appreciation and an attractive dividend stream to shareholders

with the need to invest in the business to maintain a market-

leading offering and high service standards for our clients.

The Group seeks to maintain a strong net cash position and a

robust balance sheet with sufficient capital and liquidity to fund

ongoing trading and future growth, in line with our aim of offering

a lifelong, secure home for people’s savings and investments. The

Group has a high conversion rate of operating profits to cash and

its net cash position at 30 June 2022 was £508.0 million (2021:

£503.5m). Despite this being the first year of our investment

programme, cash generated from operations more than offset the

payments of the 2021, final ordinary and special dividends and the

2022 interim dividend. This includes cash on longer-term deposit

and is before funding the 2022 final dividend of £130 million.

The Group has a Revolving Credit Facility agreement with Barclays

Bank to provide access to a further £75 million of liquidity. This is

undrawn and was put in place to further strengthen the Group’s

liquidity position and increase our cash management flexibility.

The Group also funds a share purchase programme to manage

the impact of dilution from operating our share-based

compensation schemes.

The healthy net cash position provides both a source of

competitive advantage and support to our client offering.

It provides security to our clients, and allows us to provide them

with an excellent service, for example through using surplus

liquidity to allow same day switching between products that have

mismatched settlement dates.

Capital

30 June 2022

£m

30 June 2021

£m

Shareholder Funds 575 593

Less: goodwill, intangibles

and other deductions (41) (37)

Tangible capital 534 556

Less: provision for dividend (130) (183)

Qualifying regulatory capital 404 373

Less: estimated capital requirement (219) (183)

Surplus capital 185 190

Total shareholders’ equity, as at 30 June 2022, made up of share

capital, share premium, retained earnings and other reserves

decreased to £575.1 million (2021: £593.5m) given the reduction

of profit for the year resulting from the commencement of the

investment programme and the payment of the 2021 final and

special dividends and the 2022 interim dividend. Having made

appropriate deductions as shown in the table above, surplus

capital amounts to £185 million.

HL plc has four subsidiary companies authorised and regulated

by the FCA. The FCA’s Investment Firm Prudential regime (IFPR)

came into effect on 1st January 2022 focusing on the potential

harm firms can pose to consumers and markets. HL completes this

assessment through the Group Internal Capital Adequacy and Risk

Assessment (ICARA) processes. Our assessment of HL’s capital

requirements takes account of the new regulatory requirements.

Consistent with the new IFPR requirements, HLAM specifically

is required to disclose regulatory capital information; this will

be available on the Group’s website at https://www.hl.co.uk/

investor-relations.

Dividend

Dividend (pence per share)

2022 2021

Interim dividend paid 12.26p 11.90p

Final dividend declared 27.44p 26.60p

Total ordinary dividend 39.70p 38.50p

Special dividend – 12.00p

Total dividend 39.70p 50.50p

As announced in February this year, the Group will be undertaking

an estimated £175 million of strategic investment cost to deliver

future growth and operational efficiencies. In part, the funding

for this investment will come from the suspension of any special

dividends through FY22 and FY23. The Board, however,

is confident that Hargreaves Lansdown has sufficiently strong

financial, liquidity and capital positions to execute its strategy

without constraints and hence has committed that the ordinary

dividend will grow by at least 3% throughout the period to FY24.

The Board has declared an increase in the total ordinary dividend

of 3% taking the ordinary dividend per share to 39.70 pence

(2021: 8.50 pence per share of ordinary dividend and 12.0 pence

per share of special dividend). The ordinary dividend is made up

of an interim dividend of 12.26 pence per share that was paid on

1 April 2022 (2021: 11.90 pence per share) and a final ordinary

dividend of 27.44 pence per share (2021: 26.60 pence per share).

Subject to shareholder approval of the final ordinary dividend at

the 2022 AGM, the final dividend will be paid on 24 October 2022

to all shareholders on the register at the close of business on

23 September 2022.

Amy Stirling

Chief Financial Officer

4 August 2022

Governance Financial statements Other information

Hargreaves Lansdown

Report and Financial Statements 2022

Strategic report

EVALUATING AND

MANAGING RISKS

RISK MANAGEMENT AND THE PRINCIPAL RISKS AND UNCERTAINTIES

Our risk management framework enables

a consistent approach to the identification,

mitigation and management of risks,

which is essential to achieve our

strategic objectives.

1. Risk management

The Group aims for effective and proactive risk management

integrated into the culture of the Group.

The Board has ultimate responsibility for ensuring the Group

deploys effective risk management. The Board determines and

oversees the Group’s risk appetite including setting and monitoring

appropriate tolerance levels within which the Group must operate.

To assist the Board in discharging its responsibilities, the Group

has implemented a comprehensive risk management framework

to support identification, mitigation and management of risk

exposures which is further described below.

The Group’s Risk Management Framework (see figure 1) applies

at both Group and Legal entity levels and has been in place

throughout the period under review and up to the date of

Figure 1: Enterprise Risk Management Model

Policies & Standards

Group Risk Management Policy

Risk Category Policies

Strategic

Financial

Operational

Investment

Emerging Risk Policy

Risk Events & Escalation

Framework

Enterprise Risk Framework

Risk Appetite Framework

Risk Assurance Framework

IFPR (ICARA) Approach

Risk Acceptance

Internal Control Policy

Risk Cycle

Identify

AssessReport

MitigateMonitor

Manage

& Control

Governance

Model

Governance

Committee

(MGC)

Operational

Risk (ORC)

Executive

Committees

†

Legal Entity

Management

Structure

BRC*

Exco**

ERC

‡

* plc Board Risk Committee ** Executive Committee ‡ Executive Risk Committee † e.g. Treasury & Product Governance Committees

Governance Financial statements Other information

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Report and Financial Statements 2022

Strategic report

RISK MANAGEMENT AND THE PRINCIPAL RISKS AND UNCERTAINTIES

EVALUATING AND MANAGING RISKS CONTINUED

approval of the Report and Financial Statements and is in line with

the UK Corporate Governance Code. The Group regularly reviews

the risk framework, risk capabilities and tools to ensure effective

ongoing risk management.

Key enhancements made during the period include a refreshed

Risk Taxonomy and structure, build out of key risk specialisms

including Change and Technology risk and development of a

Strategic Risk Appetite Framework to support risk profile analysis

and support risk reporting.

The Group established formal projects overseen by the Board

to deliver the enhanced operational resilience requirements

and the new IFPR regulation for January 2022. The initial

ICARA was reported to the Board Risk Committee in April 2022.

Governance of the risk and control framework

The Group includes four principal operating legal entities,

each of which is supported by a Legal Entity Board and a

Management Committee. This Legal Entity structure manages

risk using the Group Risk Framework within agreed risk appetite

levels, with escalation on an agreed materiality basis to the

Group Executive Committee.

Risk management is acknowledged to be a core responsibility

of all colleagues at Hargreaves Lansdown.

The oversight of risk and controls management is provided by

Management and Board committees as well as the Group Risk

and Compliance functions. The Board is responsible for overseeing

the Audit, Risk, Remuneration and Nomination Committees.

Risk reporting from both first and second lines of defence support

these committees in the oversight and management of risk.

A risk policy suite is in place aligned to the Risk management

framework, with policies reviewed on an annual basis.

Key governance committees relating specifically to the

maintenance and oversight of the risk and control environment

include the Board, the Board Risk Committee, the Executive

Committee, and the Executive Risk Committee.

During the period, the governance structure has further evolved,

with the formation of an Operational Risk Committee and a

Conduct & Client Outcomes Committee reflecting the continued

growth of the business. Detail of the governance structure is

included in the Corporate Governance section of the report.

The activities of the Board and Executive Committees are

detailed in the Corporate Governance report on pages 66-73.

Key risk management framework components

Risk Taxonomy

The Group has an agreed and documented risk taxonomy, which

sets out the risk categories to which the business is exposed.

The risk taxonomy ensures that there is completeness in the

capture of risks, facilitates effective aggregation of risk across

the broader group as well as ensuring that there is consistency

of treatment across all risk categories.

The broader risk management framework is aligned to this

taxonomy which is reviewed regularly and forms the key

mechanism to support Management and Board oversight

of risk exposures.

Risk Specialists

During the period the Group has continued to build capabilities

to enhance risk management.

In the First Line of Defence a new Chief Control Officer role

has been created to develop and lead a dedicated team of risk

specialists in the business. The Second Line of Defence has

also been strengthened with greater capacity including further

capability in specialist areas e.g., Technology, Digital and Change

risk, Investment Risk and Conduct.

Figure 2: Risk Appetite

Principal Risks

Risk Appetite

Statements

Key Risk

Indicators

(KRIs)

Level 2 Risk Taxonomy

31 Risks covering

all activity at HL

Level 1 Risk Taxonomy

Strategic

Operational

Financial

Investment

Risk metrics

Governance Financial statements Other information

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Report and Financial Statements 2022

Strategic report

RISK MANAGEMENT AND THE PRINCIPAL RISKS AND UNCERTAINTIES

EVALUATING AND MANAGING RISKS CONTINUED

Risk appetite

The Group’s risk appetite is an articulation of the nature and

type of risks that the Group is willing to accept, or wants to avoid,

in order to achieve its business objectives and strategy.

The risk appetite statements combine qualitative statements and

quantitative measures, or thresholds expressed relative to metrics

such as operational performance, capital, and liquidity.

The Group’s risk appetite and its components are reviewed

on at least an annual basis. A particular focus during the period

has been the review of appetite and associated KRIs linked to

corporate strategy.

The Board has overall responsibility for determining the nature and

extent of the acceptable levels of risk it is willing to accept in the

course of achieving business objectives and strategy, achieving

positive client outcomes, and ensuring that risks are managed

effectively across the Group. The categories include strategic,

operational, financial and investment risk.

The Board sets the Group’s risk appetite and measures across the

four Level One risk categories, with KRIs monitored against each.

All KRIs include materiality thresholds for escalation and reporting.

Risk reporting

The Second Line of Defence provides risk and control reporting

to committees, Legal Entity Boards and Executive committees.

The standard format is a GCRO Report covering trends,

the Principal Risk profile, risk appetite, material risk events

and emerging risks.

Three Lines of Defence Model

Hargreaves Lansdown runs a Three Lines of Defence Model.

The First Line of Defence own and are accountable for the

management of risk. There are also embedded specialist teams in

the first line to support maintenance of a strong control framework.

Key examples of first line control functions include:

• CASS Oversight team – provides guidance to operational teams

on CASS and provides oversight of the CASS control environment.

• Operations Oversight team – provides risk and control support

to Operations, creates MI for the Operations Management Team,

and manages the Operations process framework.

• A dedicated IT Security team, which manages, tests,

and controls the cyber control environment.

• A Product Governance team – provides oversight of the design,

target markets and management of our core client propositions.

• The new Chief Control Officer team provides guidance,

consistency, and control expertise.

The Second Line of Defence is responsible for the delivery of

risk and control frameworks and policies as well as the provision

of assurance to Management that first line risk management

practices are appropriately embedded. In the Second Line of

Defence, the Group Risk and Compliance functions include teams

focused on regulatory compliance monitoring, prevention of money

laundering, prevention and detection of fraud and oversight

of data protection, Operational, Technology, Change, Conduct,

and Investment risks.

Individual capital adequacy assessment process

The Group transitioned from the ICAAP to the ICARA in Q1 2022.

The primary purpose of the ICARA is to ensure that there is a clear,

accurate and transparent link between the risk profile of the

business and the capital and liquidity held by the firm. The final

approval of the HL ICAAP was in December 2021 and the initial

ICARA was included in reporting in April 2022. The ICARA is

overseen by the Board Risk Committee

Response to the Russian invasion of Ukraine

Following the invasion of Ukraine, the Executive Committee

established a governance structure to manage the Group’s

response. Particular areas of concern were increased cyber risk,

market fluctuations, Russian and Belarussian funds, and clients

and HL’s offices and colleagues in Poland.

A working group and Steering Committee were established

with escalation to the Executive Committee. During the period,

desktop scenarios were run, existing stress tests and scenarios

were reviewed and further stressed, with findings linked to the

Important Business Services (IBS) part of the Group operational

resilience model and the ICARA.

The Working Group and Steering Committee included membership

from the Executive Committee and the wider Leadership Group,

including the Head of Operational Resilience, and the CRO.

Governance Financial statements Other information

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Report and Financial Statements 2022

Strategic report

RISK MANAGEMENT AND THE PRINCIPAL RISKS AND UNCERTAINTIES

EVALUATING AND MANAGING RISKS CONTINUED

2. Principal risks and uncertainties

The Board has carried out an assessment of the emerging risks

and principal risks facing the Group, including those that would

threaten its business model, future performance, solvency,

or liquidity.

In making its assessment, the Board considered the likelihood

of each risk materialising in the short and longer term. The Board

considered the principal risks in arriving at its viability statement.

The principal risks and uncertainties faced by the Group are

detailed below. The principal risks are categorised in line with the

risk management framework and aligned to the core risk exposures

of the Group; strategic, operational, financial and investment risks.

Principal risks reported here are those attracting the greatest

focus, and to which the organisation has the largest exposure.

The principal risks are linked to risk appetite and KRI measures

for reporting

In assessing the 2021-2022 changes, consideration was given

to the impact of COVID-19 and the Russian invasion of the Ukraine

on the Group’s inherent risks after considering mitigating actions

and controls.

As a result of this, an increasing likelihood has been reported

against the performance of markets, people, and financial crime

principal risks. Operational delivery was considered to be stable

after assessing the performance of existing, additional, and revised

processes and controls.

Management and the Board regularly discuss emerging risks.

Topics discussed during the period included third party services

and solutions, operational resiliency, cybercrime, invasion of the

Ukraine and communications from the regulator.

In assessing all risks, HL considers the reputational impacts

of risks materialising and the impacts on HL clients, of negative

publicity, and risks to the achievement of business objectives.

To mitigate potential reputational impacts HL ensures risk

exposures and potential impacts are appropriately and proactively

escalated through key risk governance. To support potential media

attention, HL has a PR function, makes use of external advisers,

and has an Internal Corporate Affairs Group to support the

Executive Committee.

Viability statement

The Board has considered the principal risks,

in arriving at the viability statement below

The principal risks and uncertainties faced by the Group

are detailed below. The principal risks are categorised into

strategic, operational, financial and investment in accordance

with our risk management framework.

Management and the Board regularly discuss emerging risks.

Topics discussed during the period included communications

from the regulator, third party services and solutions, operational

resiliency, cybercrime, and the COVID-19 pandemic.

Assessment process for the viability statement

In accordance with provision 31 of the UK Corporate

Governance Code, the Directors have assessed the viability of

the Group over the four-year period to June 2026 and confirm

that they have a reasonable expectation that the Group will

continue to operate and meet its liabilities up to this date.

The Directors’ assessment has been made with reference to the

Group’s current position and strategy, the Board’s risk appetite,

the Group’s financial forecasts and the Group’s principal risks

and uncertainties.

The Directors’ assessment has also been made after careful

consideration of the impact that the Russian invasion of Ukraine,

the increase in inflation and the associated cost of living crisis,

is having on the UK and global economy. From an HL perspective,

planning and scenario testing has examined the company’s

resilience to worst case scenarios with a range of testing over

three potential future outcomes, each looking at different

sensitivities such as interest rates, market levels and stockbroking

volumes. The worst outcome saw a 17% fall in the Group’s profit

after tax over the four-year period to June 2026. The Directors

conclude that their expectation of the Group’s viability does not

change as a result of this.

The Board considers that a time horizon of four years is

an appropriate period over which to assess its viability

and prospects, and to plan the execution of its strategy.

This assessment period is consistent with the Group’s current

strategic forecast and ICARA and it also matches the timescale

over which most changes to major regulations and the external

landscape that affect our business typically take place. The Board

has informally considered the viability of the business beyond the

assessment period and believe that the requirement for clients,

current and future, to have access to a secure and efficient

savings and investment platform will continue to increase.

The strategic forecast is approved annually by the Board and

regularly updated as appropriate. It considers the Group’s

profitability, cash flows, dividend payments, capital requirements

and other key variables such as exposure to principal risks. It is

also subjected to stress tests and scenario analysis, such as

fluctuations in markets, increased competition and disruption

to business, to ensure the business has sufficient flexibility to

withstand these impacts by making adjustments to its plans

within the normal course of business.

Governance Financial statements Other information

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Report and Financial Statements 2022

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RISK MANAGEMENT AND THE PRINCIPAL RISKS AND UNCERTAINTIES

EVALUATING AND MANAGING RISKS CONTINUED

Taxonomy Level 1 Strategic Taxonomy Level 2 Strategy

Owner:

Chief Executive Officer

Link to strategy:

Link to HL values:

Put the client first, do the

right thing, make it easy

2021-2022 Change

STABLE

Risk

Risk that HL does not align propositions

and activity with HL’s strategic objectives.

Potential impact

• Erosion of shareholder value

• Negative impact on our reputation as an

innovative market leader

• Negative impact on existing clients in HL’s

ability to maintain premium client service

Mitigation and controls

• The Executive team and Board review strategy

in the context of propositional design and

service enhancement on a regular basis

• Dedicated proposition/client experience team

is in place

• Product governance process embedded

including use of client focus groups

• Regular client experience reviews by

the Executive

• Clear objectives aligned to Executive owners

and a supporting operating plan in place

Key risk indicators

• NNB v forecast

• Net Ease Scores

• Client retention

• Service rating

• Complaints

• Risk events

2021/22 activity

• Agreed a 5-year growth strategy

• Launched the new HL Growth fund (Default Fund

for Workplace clients)

• Launched Savings and Resilience Barometer as part

of 5 to Thrive client offering

Taxonomy Level 1 Strategic Taxonomy Level 2 Performance of markets

Owner:

Chief Financial Officer

Link to strategy:

Link to HL values:

N/A

2021-2022 Change

INCREASING

Risk

Risk that HL revenue is adversely affected by

market levels impacting strategic expectations,

resulting in erosion of shareholder value.

Potential impact

• Reduced AUA and AUM and corresponding

negative impact on revenues

Mitigation and controls

• Diversified revenue streams balanced

between recurring and transaction-based

• Monitoring and maintenance of client service

• Executive Committee, Treasury Committee

and Finance Reporting

• Liquidity policy and associated

controls oversight

Key risk indicators

• Interest rates

• FTSE 100

• Daily management information

• Client metrics (net, new and retention)

2021/22 activity

• Marketing Campaigns

• Prioritisation for internal investment on service,

technology and risk

• Ongoing discussion in the Executive Committee

Governance Financial statements Other information

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Report and Financial Statements 2022

Strategic report

RISK MANAGEMENT AND THE PRINCIPAL RISKS AND UNCERTAINTIES

EVALUATING AND MANAGING RISKS CONTINUED

Taxonomy Level 1 Operational Taxonomy Level 2 IT Operational Environment

Owner:

Chief Digital &

Information Officer

Link to strategy:

Link to HL values:

Do the right thing, make it easy

2021-2022 Change

STABLE

Risk

Risk that HL fails to manage and maintain

existing technological architecture, environment,

or components that are key to operational

delivery effectively.

Potential impact

• Inability to maintain operational efficiency

resulting in increased costs

• Poor client outcomes

• Reputational damage

Mitigation and controls

• IT Architecture plan

• Rolling internal and external monitoring

of IT environment

• Operational Plan, including prioritisation

of IT development

• Identification of contingency providers

for technology

Key risk indicators

• Unplanned downtime of client facing applications

• Status of critical projects

• Core system monitoring

• System patching status

• Technology risk events

2021/22 activity

• Delivery of a full End-to-End IT Testing platform

• Platform security improvements

• Refresh of technology strategy

Taxonomy Level 1 Operational Taxonomy Level 2 Operational delivery core

Owner:

Chief Operating Officer

Link to strategy:

Link to HL values:

Put the client first, do the right

thing, make it easy, do it better

2021-2022 Change

STABLE

Risk

Risk that HL fails to design or implement

appropriate policies, processes, or technology.

Potential impact

• Incorrect or inefficient delivery of activities

• Regulatory or policy breaches

• Poor client outcomes

• Financial losses including compensation

• Reputational damage

Mitigation and controls

• Group Risk Management Framework

• Ongoing First Line of Defence monitoring of

controls, control testing and self-assessment

• Process manuals and process mapping

• Training and development

• Operational MI

• Control focus at key governance forums,

including CASS Committee, Executive Risk

Committee and Board

• Risk Committee

Key risk indicators

• Risk events and Compliance breach monitoring

• Regulatory scrutiny or issues

• Third party breaches

• Complaints

• Helpdesk call quality

• Colleague retention rates

• Operational processing and transactional error rates

2021/22 activity

• New trading component, with enhanced scalability and speed

• New payments partner – Stripe

• Enhancements to our transfers processes

Governance Financial statements Other information

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RISK MANAGEMENT AND THE PRINCIPAL RISKS AND UNCERTAINTIES

EVALUATING AND MANAGING RISKS CONTINUED

Taxonomy Level 1 Operational Taxonomy Level 2 Regulatory Compliance

Owner:

Executive Committee

Link to strategy:

Link to HL values:

Put the client first, do the right

thing, make it easy, do it better

2021-2022 Change

INCREASING

Risk

Risk that HL fails to comply with regulatory

and legal standards and/or required regulatory

change is not implemented to regulatory

expectations or requirements.

Potential impact

• Regulatory breaches

• Increased regulatory scrutiny, enforcement

action, censure, or fines

• Increased complaints or claims brought

by clients

• Where client complaints are not upheld –

complaints to the Financial Ombudsman

Service and FOS awards

• Litigation

• Reputational impact

• Missed opportunities to achieve

competitive advantage

Mitigation and controls

• Compliance-led Horizon scanning

and monitoring

• Change Committee oversight

• Compliance Plan, including complaint

handling plans

• Ongoing open dialogue with the FCA

Key risk indicators

• Volume of client complaints, FOS complaints and awards

• Volume of new outputs from regulatory bodies

• Number of regulatory change projects

• Number of regulatory breaches

• Litigation

2021/22 activity

• CASS Improvement Plan

• Investments Firms Prudential Regime (PS21/6)

• Operational Resilience (PS21/3)

• Consumer Duty (CP21/13)

Taxonomy Level 1 Operational Taxonomy Level 2 Financial Crime

Owner:

Executive Committee

Link to strategy:

Link to HL values:

Put the client first, go the

extra mile, do the right thing,

make it easy, do it better

2021-2022 Change

DECREASING

Risk

Risk that HL fails to design or implement

appropriate frameworks, including policies,

processes, or technology, to counter HL being

used to further financial crime by either internal

or external parties.

Potential impact

• Loss of sensitive data

• Poor client outcomes (including fraud)

• Negative impact on confidence in HL

• Diminish the integrity of the financial system

• Regulatory censure

Mitigation and controls

• Dedicated Chief Information Security Officer

and team, and a Security Operations Centre

focused on the detection, containment, and

remediation of information security threats

• Dedicated Information Security, Anti Money

laundering and Client Protection teams in place

• Formal policies and procedures and a robust,

rolling risk-based programme of penetration

and vulnerability testing in place

• Horizon scanning of peer group to understand

industry trends

Key risk indicators

• Fraud monitoring

• Cyber threat assessment

• Time taken to address security vulnerabilities

• Number of Information Commissioner’s Office (ICO) notifiable

data protection breaches

2021/22 activity

• Appointment of a new Group Head of Financial Crime (MLRO)

• Creation of a First Line Financial Crime team reporting to the

new Chief Controls Officer

• A programme of training and awareness for all colleagues

• Continuous cycle of cyber control improvements

Governance Financial statements Other information

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Strategic report

RISK MANAGEMENT AND THE PRINCIPAL RISKS AND UNCERTAINTIES

EVALUATING AND MANAGING RISKS CONTINUED

Taxonomy Level 1 Operational Taxonomy Level 2 Data

Owner:

Chief Digital and

Information Officer

Link to strategy:

Link to HL values:

Put the client first, go the

extra mile, do the right thing,

make it easy, do it better

2021-2022 Change

INCREASING

Risk

Risk that HL fails to design or implement

appropriate frameworks, including policies,

processes, or technology, to manage data

and data storage.

Potential impact

• Loss of sensitive data

• Poor client outcomes (including fraud)

• Inefficient processing

• Regulatory censure

Mitigation and controls

• Dedicated Chief Information Security Officer,

Chief Data Officer and Data Protection Officer

in place

• Data Governance function

• Data storage standards

• Data usage standards

Key risk indicators

• Data related Risk Events

• Data reporting issues

• Data Privacy Impact Assessment completions

• Cyber events

• Fraud events

2021/22 activity

• Appointment of a Chief Data Officer

• Established data strategy and defining architecture to

support objectives

• Established a programme of work to deliver the Group’s data

insight capabilities

• Alignment of data and digital capabilities to support the Group’s

future requirements

Taxonomy Level 1 Operational Taxonomy Level 2 Duties to Clients

Owner:

Executive Committee

Link to strategy:

Link to HL values:

Put the client first, go the

extra mile, do the right thing,

make it easy, do it better

2021-2022 Change

INCREASING

Risk

Risk that HL’s culture and the HL values

fail to support an appropriate client focused

conduct by all colleagues, leading to poor

client outcomes.

Potential impact

• Poor client outcomes

• Negative reputational impact

• Regulatory censure and fines

• FOS complaints and awards

• Litigation

• Erosion of shareholder value

• Negative impact on achievement of AUA

and client number strategic targets

Mitigation and controls

• Colleague Communication and Training

• Conduct Risk policy

• Vulnerable Client policy

• Risk and incident monitoring and review

• Product Governance Committee

• Corporate and social responsibility programme

• Business-led diversity, inclusion, and

well-being programme of activity

• Colleague Performance Development model

• Whistleblowing process

• Conflict Management

Key risk indicators

• Glassdoor rating

• Colleague surveys

• Colleague retention

• Client survey results

• Litigation

• Volume of client complaints

• FOS complaints and awards

• Clients cancelling a new product or service

2021/22 activity

• Established a project to deliver compliance

with the Consumer Duty regulations (CP21/13)

• Strengthening Vulnerable Clients strategy as part of the

Consumer Duty implementation

• Developed governance arrangements, including

Conduct & Client Outcomes Committee

Governance Financial statements Other information

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Strategic report

RISK MANAGEMENT AND THE PRINCIPAL RISKS AND UNCERTAINTIES

EVALUATING AND MANAGING RISKS CONTINUED

Taxonomy Level 1 Operational Taxonomy Level 2 Operational Resilience

Owner:

Chief Operating Officer

Link to strategy:

Link to HL values:

Put the client first, do the right

thing, make it easy, do it better

2021-2022 Change

STABLE

Risk

Risk that HL fails to establish robust

operational resilience solutions to support

positive client outcomes.

Potential impact

• Poor client outcomes

• Policy or regulatory breaches

• Operational inefficiencies or failures

• Reputational damage

Mitigation and controls

• Dedicated Operational Resiliency team

and programme

• Business Impact Analysis

• Business Continuity Plans

• Disaster Recovery Plans

• Crisis Management Team

• Desktop scenarios

• Scenario based playbooks

Key risk indicators

• System downtime

• Process failures

• Crisis management response

2021/22 activity

• Review of Importance Business Services

• Delivery of a full End-to-End IT testing platform

• Review and enhancements to crisis management

and Incident management approaches

Taxonomy Level 1 Operational Taxonomy Level 2 People

Owner:

Chief People Officer

Link to strategy:

Link to HL values:

Put the client first, do the right

thing, make it easy, do it better

2021-2022 Change

INCREASING

Risk

Risk that HL fails to attract, retain, develop,

and motivate great people who are aligned

to HL Values.

Potential impact

• Operational inefficiency or poor conduct

• Poor client outcomes

• Reputational damage

Mitigation and controls

• Effective performance and Talent Management

of all employees with flight risk assessments

• Regular review of employee reward offering

to ensure competitive

• Regular staff surveys and employee forums

to understand morale

• People agenda monitored at ExCo and Board.

Key risk indicators

• Colleague retention rates

• Colleague absence monitoring

2021/22 activity

• ‘Breathing Space’ payment for junior colleagues to help with

cost of living

• Improvements in ‘Health & Well-being’ support to all colleagues

• People communications through HL Way to support HL Values

Governance Financial statements Other information

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Report and Financial Statements 2022

Strategic report

GOVERNANCE

Chair’s introduction 61

Board of Directors 63

Corporate governance report 66

Audit Committee report 74

Directors’ Remuneration report 79

Nomination Committee report 107

Risk Committee report 111

Directors’ report 114

Section 172 statement 118

Statement of Directors’ responsibilities 122

Strategic report Financial statements Other informationGovernance

Hargreaves Lansdown

Report and Financial Statements 2022

SUPPORTING

LONG-TERM SUCCESS

CHAIR’S INTRODUCTION TO CORPORATE GOVERNANCE

I am pleased to introduce our Corporate Governance Report,

which sets out how the Group’s governance framework supports

and promotes its long-term success, and provides an overview

of the activities of the Board and its Committees.

We apply and report under the 2018 UK Corporate Governance

Code (the Code). Our Compliance Statement confirms our

compliance with the Code during the period under review.

You can read more about how we have applied its principles

throughout our Corporate Governance Report.

Culture

Our culture underpins our approach to governance and risk

management. The Board promotes a culture that encourages

good governance, effective decision making and appropriate risk

management and, this year, has continued to support initiatives

to develop and embed the “HL Way” within the organisation.

Maintaining and strengthening our culture, which promotes

accountability and clarity on responsibilities and ensures that

we can focus on making the right decisions, at the right level,

with the right information, is a key priority for the Board and

essential to the successful delivery our strategy. You can find

out more information on this on page 16 of the Strategic Report.

Board changes

Since the last Report, the Board welcomed two new Directors:

Penny James joined on 1 September 2021 as a new independent

Non-Executive Director and Senior Independent Director; and

Amy Stirling joined on 21 February 2022 as Chief Financial Officer

and Executive Director, replacing Philip Johnson who stepped

down as CFO on 31 January 2022. On 17 June 2022, the Company

was pleased to announce the appointment of Darren Pope

as an independent Non-Executive Director with effect from

1 September 2022.

When deciding on these appointments the Board was able to

benefit from the considerable work done by the Nomination

Committee to identify: the skills and experience required by the

Board to deliver the strategy; and the areas where the Board could

benefit from additional depth of skills or experience to improve

its resilience.

You can find more information about their appointment and the

skills and experience they bring in the Nomination Committee

Report on page 110.

Diversity and Inclusion

It is widely accepted that greater diversity within a business

drives better decision-making and we strongly believe that

building a diverse and inclusive workforce will lead to better

outcomes for clients, colleagues and our business.

You can read more about our approach to building diversity and

inclusion across our workforce and the initiatives that support it

on pages 26 to 30 of the Strategic Report.

The Board recently updated the Group’s diversity policy for Board

appointments to align with new targets set out in the Listing Rules

and is proud to have met those targets. As at 30 June 2022,

fifty percent of our Board is made up of women; three of our four

senior Board positions are held by women and we have at least

one Director from an ethnic minority background.

You can read more about the policy and the importance we place

on diversity in the recruitment of Non-Executive Directors and

across the organisation on pages 107 to 110 of the Nomination

Committee Report.

The role of the Board is to set the

tone from the top on the Group’s

governance, culture and values.

Deanna Oppenheimer

Chair

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Governance

CHAIR’S INTRODUCTION TO CORPORATE GOVERNANCE

SUPPORTING LONG-TERM SUCCESS CONTINUED

Board Evaluation

Each year, the Board undertakes a formal evaluation of its

performance, and that of its Committees and the Directors,

covering topics such as composition, diversity and how effectively

the Directors work together to achieve objectives.

In August 2021, we carried out an externally facilitated Board

evaluation, supported by Independent Audit, which recognised

much positive change since the last review and identified

a number of key priorities and outcomes, including further

strengthening the senior management team and continued

oversight of the development of the Risk function.

The Nomination Committee has overseen implementation of

the recommendations from the review and more information on

this is provided on page 109 of the Nomination Committee Report.

Stakeholder engagement

We continue to recognise the importance of engaging with and

considering the interests of our stakeholders in promoting the

Group’s long-term success.

We value and appreciate the input of our colleagues and ensure

that we regularly engage with and listen to our colleagues through

a series of initiatives including our workforce advisory panel, the

HL Colleague Forum, regular colleague surveys and a coordinated

internal communications programme.

We spend time nurturing a strong relationship with our

shareholders. We regularly meet with shareholders and Adrian

Collins, a representative of one of our founder shareholders,

has been a member of the Board since November 2020.

We are conscious of our impact on the wider community and

take time to ensure that we are considering the environment and

giving back to the community we work in. This year we launched

our Savings and Resilience Barometer to help our clients and the

wider community better understand the importance of financial

resilience. We are very proud of our relationship with Bristol City

Council and our aim of making Bristol the most financially resilient

city in the UK.

Our relationship with the FCA as our regulator is of fundamental

importance to us and we maintain an open, constructive dialogue

with them to ensure that we are aware of and meet the standards

that they expect.

You can read more about how the Directors have had regard

to the interests of our colleagues and our other key stakeholders

within the context of promoting the success of the Company

in our Section 172 Statement on pages 118 to 121.

Deanna Oppenheimer

Chair

4 August 2022

Compliance statement

A revised version of the UK Corporate Governance Code

(the Code) was published by the FRC in July 2018 and

has been applied by the Company during the period under

review. The Code sets out the standards of good practice

in relation to how the Company should be governed and

can be found on the FRC’s website at www.frc.org.uk.

The Board is satisfied that the Company has complied

in full with the provisions of the Code throughout the period

under review.

The Corporate Governance Report provides details of the

Company’s corporate governance framework and how it has

applied the principles set out in the Code.

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Report and Financial Statements 2022

Governance

BOARD OF DIRECTORS

Chair Executive Directors

Deanna Oppenheimer

Chair and

Non-Executive

Director

Chris Hill

Chief Executive

Officer

Amy Stirling

Chief Financial

Officer

Appointed to the Board

February 2018, independent on appointment

Skills and experience

Deanna has extensive board level governance and

leadership experience in both public and private

financial services businesses having worked in

the industry for over 35 years at executive and

non-executive level. Her rich executive experience

includes, amongst other things, the transformation

of the retail banking division at Barclays. As a

non-executive director, Deanna formerly served as

a director for Tesco plc, Whitbread plc, AXA Group,

Tesco Bank and NCR Corporation. Deanna is a member

of the 30% Club.

Committee membership

Nomination Committee (Chair)

Remuneration Committee

Other current appointments

Director of Thomson Reuters Corporation,

Chair designate of IHG plc.

Appointed to the Board

Chief Executive Officer since April 2017

(Chief Financial Officer from February 2016 to

September 2016, Deputy Chief Executive Officer

from October 2016 to April 2017)

Skills and experience

Chris has led the Company since 2017, driving the digital

transformation of the Group’s business, including the

strategy to expand HL’s position as the UK’s leading

digital wealth management platform and ensuring HL is

at the heart of creating greater engagement with saving

and investing in the UK. Chris came to HL with more than

two decades of experience, across a range of business

sectors. He was previously Chief Financial Officer at

IG Group Holdings plc, a FTSE 250 online trading

platform for retail customers, and Chief Financial Officer

at Travelex following a number of finance leadership

roles at GE Capital. Chris qualified as a chartered

accountant at Arthur Andersen and is an associate

member of the Association of Corporate Treasurers.

Committee membership

None

Other current appointments

Member of the FCA Practitioner Panel

Board member of the Investment Association

Appointed to the Board

February 2022

Skills and experience

Amy has significant financial and strategic leadership

experience in client facing businesses across the

telecommunications and financial services sectors.

She has considerable transformation and M&A

experience at both executive and non-executive level

and is a qualified chartered accountant. Amy was

previously Chief Financial Officer of the Virgin Group

and other previous appointments include non-executive

director and chair of the Audit Committee at RIT Capital

Partners plc, non-executive director at Virgin Money

UK plc, Chief Financial Officer of The Princes Trust and

Chief Financial Officer at TalkTalk Telecom Group Plc.

Committee membership

None

Other current appointments

None

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Governance

BOARD OF DIRECTORS

CONTINUED

Non-Executive Directors

Roger Perkin

Independent

Non-Executive

Director

Dan Olley

Independent

Non-Executive

Director

John Troiano

Independent

Non-Executive

Director

Andrea Blance

Independent

Non-Executive

Director

Appointed to the Board

September 2017

Skills and experience

Roger is a qualified accountant with recent and relevant

financial experience and competence in accounting and

audit, as well as extensive financial services experience.

He is a former partner of Ernst & Young, and has

previously been a non-executive director at Evolution

Group plc, Friends Life Ltd, Nationwide Building Society,

Electra Private Equity plc and TPICAP plc. Roger chaired

or served on the Audit and Risk Committees of each of

these and additionally was Senior Independent Director

of Nationwide Building Society.

Committee membership

Audit Committee (Chair)

Risk Committee

Nomination Committee

Other current appointments

Non-Executive Director and Chair of the

Audit Committee of AIB Group (UK) plc

Appointed to the Board

June 2019

Skills and experience

Dan is a seasoned senior technology leader with a track

record of driving digital transformations in established

businesses, including financial services, insurance,

business information solutions, research and healthcare.

He brings a problem solving and analytical skillset,

along with experience of successfully implementing

advanced technologies to drive both revenue growth

and operational process efficiency and optimisation.

Committee membership

Risk Committee

Remuneration Committee

Other current appointments

CEO of Dunnhumby Ltd

Appointed to the Board

January 2020

Skills and experience

John has significant investment and asset management

experience. John has spent 38 years at Schroders in

a wide range of roles including investment research

and analysis, fund management, and has worked across

both retail and institutional channels. Most recently,

as Head of Distribution, he was responsible for the

design and implementation of business strategy globally

and the oversight of sales and client service activities.

Committee membership

Risk Committee

Audit Committee

Remuneration Committee

Other current appointments

Independent Non-Executive Director of Hargreaves

Lansdown Fund Managers Ltd

Appointed to the Board

September 2020

Skills and experience

Andrea is a Chartered Accountant and brings extensive

Board and financial services experience having spent

her executive career at Legal & General Group plc where

she was a member of the Group Executive Committee

and held a diverse range of senior leadership roles

including finance, risk and regulation, marketing and

strategy. Andrea’s past non-executive roles include Risk

Committee Chair at Scottish Widows plc and Lloyds

Banking Group Insurance Division, Senior Independent

Director and Audit Committee Chair at ReAssure Group

plc and a member of William & Glyn’s pre-IPO board.

Committee membership

Risk Committee (Chair)

Audit Committee

Nomination Committee

Other current appointments

Senior Independent Director and Chair of the

Remuneration Committee of Provident Financial

Group plc

Non-Executive Director at Aviva plc

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Report and Financial Statements 2022

Governance

BOARD OF DIRECTORS

CONTINUED

Non-Executive Directors Senior Independent Director

Moni Mannings

Independent

Non-Executive

Director

Adrian Collins

Non-Independent

Non-Executive

Director

Penny James

Senior Independent

Director

Appointed to the Board

September 2020

Skills and experience

Moni is a qualified solicitor with a strong background

in international banking and finance and was a Senior

Partner and Board member of law firm Olswang LLP.

She has held a number of non-executive positions

including as a Board member of Dairy Crest Group plc,

Polypipe Group plc, the Solicitors Regulation Authority

(chairing its Equality, Diversity and Inclusion Committee),

Cranfield University and Deputy Chair of Barnardo’s.

Committee membership

Remuneration Committee (Chair)

Nomination Committee

Risk Committee

Other current appointments

Senior Independent Director and Chair of the

Remuneration Committee of Investec Bank plc

Non-Executive Director of easyJet plc

Non-Executive Director and Remuneration Committee

Chair of Cazoo Group Ltd

Appointed to the Board

November 2020

Skills and experience

Adrian has worked in the fund management business

for over 45 years, most recently at Liontrust Asset

Management where he served as Executive Chairman

from 2009 to 2019. During this period, Adrian oversaw

a transformation in the business, broadening its

investment and distribution capabilities and undertaking

numerous acquisitions. Adrian has extensive experience

across fund management and adjacent sectors having

held senior roles at Gartmore, where he was Managing

Director, Trustnet (which he co-founded), Jupiter,

Bestinvest and Lazard Investors. He is an experienced

non-executive director.

Adrian has been appointed to the Board as a

shareholder representative and as such is not deemed

to be independent.

Committee membership

None

Other current appointments

Chairman of Logistics Development Group plc

(formerly Eddie Stobart Logistics plc)

Chairman of CIP Merchant Capital Ltd

Appointed to the Board

September 2021

Skills and experience

Penny brings extensive financial services experience

with strong leadership skills, financial and risk expertise,

strategic thinking and cultural alignment. Since May

2019 Penny has been the Chief Executive Officer

of Direct Line Insurance Group plc, having joined

in November 2017 as Chief Financial Officer. Penny

previously held a number of roles at Prudential plc

including Group Chief Risk Officer and Director of Group

Finance. Prior to this Penny was Group CFO at Omega

Insurance Holdings Limited and CFO, UK General

Insurance, at Zurich Financial Services. She was

previously a non-executive director of Admiral Group plc

from 2015 to 2017.

Committee membership

Nomination Committee

Risk Committee

Other current appointments

CEO of the Direct Line Group plc

Chair of the FCA Practitioner Panel

Co-Chair of FTSE Women Leaders Review

Board member of the Association of British Insurers

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Governance

CORPORATE GOVERNANCE REPORT

SAFEGUARDING

FUTURE SUCCESS

The Board is responsible for promoting

the sustainable success of the Group,

generating value for the Company’s

shareholders over the long term, and

contributing to wider society by building

strong and lasting relationships with its

other stakeholders.

Board leadership and Company purpose

The Board sets the Group’s purpose, values and strategy,

and is responsible for developing and overseeing its framework

of governance, risk management and internal controls to ensure

that its business is managed effectively in an environment that

promotes and safeguards its future success.

You can read more about the Board’s role in setting and monitoring

the Group’s strategic priorities on pages 4 and 12 to 17 of the

Strategic Report and in the Group’s Section 172 Statement on

pages 118 to 121. Through specific dashboards aligned to the key

focus areas of our strategy, the Board can monitor and review

progress against targets. These dashboards are used throughout

the Group, ensuring alignment on execution and targets.

Additionally, how the Board has considered the Group’s

opportunities and risks, the sustainability of its business model,

and how governance around the Group’s risk management

framework contributes to the delivery of its strategic objectives,

is set out on pages 51 to 59 of the Strategic Report.

The Board also plays a key role in setting the Group’s culture

and monitoring how it is being embedded to ensure alignment

with the Group’s business priorities. The Board has been involved

in a number of ongoing key initiatives including the further

development and evolution of the HL Way (for information on

the HL Way please see page 27), more accessible and effective

communication of the Group’s strategy and vision to create

a clearer sense of purpose and common goals and improvements

to the KPIs used to oversee culture.

You can read more about the Group’s values and how the Group’s

approach to investing in and rewarding its workforce aligns to

those values on pages 3 and 29 of the Strategic Report.

Engagement with stakeholders

The Board recognises that active engagement with the Company’s

key stakeholders is fundamental to promoting the Group’s

long-term success.

Details of how the Group engages with its key stakeholders can

be found on pages 24 to 25 of the Strategic Report, and information

on how stakeholder interests have been considered by the Board

can be found in the Group’s Section 172 Statement on pages 118

to 121.

Investor relations

The Board recognises the importance of maintaining good

communication with the Company’s shareholders and there is a

comprehensive investor relations programme in place to ensure

effective engagement.

The Chief Executive Officer, Chief Financial Officer and Head

of Investor Relations regularly meet with the Company’s major

shareholders to discuss performance and strategy. This includes

a series of investor roadshows following the release of the Group’s

interim and full year results, and other meetings throughout the

year, both one-on-one and in groups at investor conferences.

The Chair also meets or speaks with the Company’s major

shareholders throughout the year, including attending a series

of governance roadshows, and the Senior Independent Director,

Head of Investor Relations and Group Company Secretary are

available to major shareholders who wish to raise questions.

The Committee Chairs are available to meet with shareholders

to discuss matters relevant to their roles.

The outcome of interactions with the Company’s shareholders are

regularly fed back to the Board to ensure that, as a whole, it has

a clear understanding of shareholder views. To provide further

perspective, analyst and broker briefings are regularly provided

to the Board. Following the appointment of Adrian Collins as the

Nominated Director, the Board also benefits from having someone

able to represent a founder shareholder, Peter Hargreaves, on all

issues considered by the Board.

The Board also considers the Report and Financial Statements to

be an important medium for communicating with the Company’s

shareholders. The Board aims to use the narrative sections to

provide detailed reviews of the Group’s business and its future

development in an engaging way that is accessible to all. Similarly,

the Company’s AGM is used as an opportunity to engage directly

with shareholders and share with them the Board’s review of

performance and its vision for the future. Further details will be

set out in the Notice of AGM that will be circulated ahead of

the meeting.

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Report and Financial Statements 2022

Governance

CORPORATE GOVERNANCE REPORT

SAFEGUARDING FUTURE SUCCESS CONTINUED

Colleagues

The Board believes that the Group’s people are key to its long-term

success. It ensures that the Group’s people policies and practices

promote its values to support that success. Further information

on the Group’s people strategy and the policies and procedures

in place to achieve its aims, including the Group’s approach to

investing in and rewarding its workforce, can be found on page 29

of the Strategic Report.

The Board also recognises the importance of engaging with

the Group’s workforce for the long-term success of the business.

The HL Colleague Forum was set up in January 2019 as a

formal workforce advisory panel to create a direct link between

colleagues and the Board on matters of strategic importance.

Further insight is obtained on colleague views through the Group’s

annual colleague survey, and half yearly pulse surveys. The views

of colleagues have been sought on a more regular basis via

additional pulse surveys and focus groups so that we can quickly

respond to colleague sentiment and obtain colleague insights

on particular topics.

Further information on how the Group engages with and considers

the views of colleagues can be found on page 25 of the Strategic

Report and in the Section 172 Statement on pages 118 to 121.

The Board believes in creating a culture of openness and

colleagues are encouraged to share their views, ideas and work

experiences. Similarly, colleagues are encouraged to raise any

concerns in confidence, and the Group has a formal policy on

whistleblowing to ensure colleagues who do speak out are

protected. Further information can be found on page 77 of the

Audit Committee Report.

Conflicts of interest

The Board takes action to identify and manage any conflicts of

interest that arise to ensure that the interests of the Company’s

shareholders as a whole are protected.

All Directors have a duty to avoid situations that may give rise

to conflicts of interest. Directors are responsible for notifying the

Chair and the Group Company Secretary as soon as they become

aware of any actual or potential conflict. The Company’s Articles

of Association permit the Board to consider and authorise any

situations where a Director has an actual or potential conflict,

and a formal procedure is in place for considering, recording and,

if appropriate, authorising conflict situations. Conflicts of interest

are included as a standing agenda item at each Board and

Committee meeting and, in determining whether to authorise

an actual or potential conflict, the Board will take into account

the specific circumstances and whether to impose conditions

on the Director in the interests of the Company.

There is a Conflicts Committee reporting into the CEO which

is responsible for ensuring there is appropriate governance and

ownership around enhancements to the conflicts management

framework within the Group (other than the Company and its

Committees). In addition, conflict management is enhanced through

the separation of investment decisions and broad membership

of investment related oversight committees including external

members as appropriate. Since our last Report, additional training

resources to assist employees in understanding their role in the

management of conflicts have been launched, with online training

to be delivered over the Summer; documentation, ownership and

accountability for conflicts has been improved; and the conflicts

Governance framework

The Board operates within a formal schedule of matters reserved,

with certain responsibilities being delegated to its permanent

Committees. Details of matters reserved for the Board can be

found on page 68. The detailed responsibilities of the Board’s

Nomination, Audit, Risk and Remuneration Committees, along with

an overview of how they have discharged those responsibilities

during the year, can be found in the Committee reports on pages

74 to 113. The Chair of each of the Committees reports to the

Board at each meeting on its activities since the previous meeting,

and the Board keeps under review the terms of reference of each

to ensure it is continuing to operate effectively.

Responsibility for matters that are not specifically reserved to the

Board is delegated to the Chief Executive Officer. This includes

oversight of the Group’s performance, delivery against the strategy

approved by the Board, and the effective management of day-

to-day operations within the governance, risk and internal control

frameworks it has developed. The Chief Executive Officer has

established the Group Executive Committee to assist him in

discharging these responsibilities. The Chief Executive Officer

also receives reports from the Conflicts Committee about

improving the Group’s framework for identifying, mitigating and

protecting against conflicts of interest, and to ensure appropriate

measures are in place to mitigate conflicts of interests between

the Group’s principal operating subsidiaries and between the

Group, its employees and clients.

Details of the roles and responsibilities of the participants in

the Company’s governance framework can be found on pages

69 and 70.

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Governance

CORPORATE GOVERNANCE REPORT

SAFEGUARDING FUTURE SUCCESS CONTINUED

Hargreaves Lansdown plc Board

Schedule of matters reserved:

• Approval of the Group’s strategic

aims and objectives

• Setting the Group’s values

and standards

• Approval of the Group’s purpose and

ensuring that its purpose, values and

strategy are aligned with its culture

• Approval of annual operating

and capital expenditure budgets

• Overseeing the Group’s operations

and management

• Ensuring the maintenance of a

sound system of internal controls

and risk management

• Reviewing performance in light

of strategic aims and objectives

• Approval of the Group’s annual

report and accounts and interim

financial statements

• Approval of the Company’s dividend

policy and payments

• Approval of major capital projects

• Approval of communications

to the Company’s shareholders

• Ensuring adequate succession

planning, agreeing Board appointments

and the appointment or removal of the

Company Secretary

• Determining remuneration

policy for Executive Directors

Audit Committee

• Monitors the integrity of the

Group’s financial reporting

• Monitors the adequacy and

effectiveness of the Group’s

internal controls

• Oversees the Group’s relationship

with its external auditor and the

effectiveness of the Internal

Audit function

Nomination Committee

• Monitors the composition of

the Board to ensure it remains

appropriate

• Recommends appointments to

the Board and its Committees

• Conducts succession planning for

the Board and senior management

• Oversees the annual evaluation

of the Board’s effectiveness

Remuneration Committee

• Oversees and keeps under review

the remuneration policies for

Executive Directors, Material Risk

Takers and colleagues generally

• Determines total remuneration

for Executive Directors, senior

management and Material Risk

Takers, and associated targets

for performance related pay

Risk Committee

• Reviews and advises the Board on

changes to the Group’s risk appetite,

risk profile and future risk strategy

• Monitors the effectiveness and

improvements being made to the

Group’s risk management framework

• Oversees the delivery of the Group’s

ICAAP/ICARA

Conflicts Committee

• Oversees the Group’s conflicts of interest policy

and framework

• Reviews conflicts of interest within the Group, the

sufficiency of mitigating measures and determines

appropriate action where material conflicts arise

Group Management Committees

• Support the Group Executive Committee in its oversight

of matters including: Risk, Conduct and Client Outcomes,

Product Governance, Remuneration and Operational Resilience

Chief Executive

Officer

Responsible for executive leadership

of the Group in accordance with

Board-approved strategic objectives

Group Executive

Committee

Established by the Chief Executive

Officer to help him discharge his duties

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Governance

CORPORATE GOVERNANCE REPORT

SAFEGUARDING FUTURE SUCCESS CONTINUED

The Group’s principal operating subsidiaries carry out its business

of providing regulated financial products and services. The boards

of the principal operating subsidiaries include various members of

the Group Executive Committee, with independent Non-Executive

Directors also sitting on the Board of Hargreaves Lansdown Fund

Managers Ltd in line with regulatory requirements. Each board

is responsible for ensuring that its business is operated in

accordance with relevant legal and regulatory requirements, within

the framework of the strategy, culture and policies determined by

the Board. The subsidiary boards are assisted by Group level and

subsidiary level management committees constituted to assist in

the day-to-day management of the business.

Board allocation of time and key Board activities

The Board devoted a significant amount of time during the period

under review to developing the revised Group Strategy which

was launched at our Capital Markets Day on 22 February 2022.

The Board was fully engaged in this process providing input and

challenge throughout the development of the Strategy and more

recently in its move to execution. The Board also spent time

overseeing the Group’s ongoing business performance including

regular updates from the Chief Executive Officer and other

members of the Group Executive Committee with deep dives into

areas of strategic importance, and the review and approval of the

Group’s annual operating plan. The Board has continued to receive

periodic reports relating to events arising out of the suspension of,

and subsequent decision by Link Asset Services to wind up, the

LF Equity Income Fund (formerly Woodford Equity Income Fund).

The following chart illustrates the time spent by the Board

on matters within the categories stated.

10%

Standard items

including updates

from Remuneration

and Nomination

Committees

21%

Finance, reporting

and audit

23%

Governance,

risk and

regulatory

46%

Business

performance

and strategy

Other key matters considered by the Board during the period

under review include:

• Business performance, through regular updates from the

Chief Executive Officer;

• Progress against strategic initiatives, via the Chief Executive

Officer’s regular business priorities updates;

• Deep dives into return to office, ESG, operational resilience,

the HL Way and cyber security – taking into account the

Russian invasion of Ukraine;

• Financial performance and investor relations, via the Chief

Financial Officer’s regular updates;

• The Group’s liquidity and capital adequacy, and the approval

of its 2021 ICAAP;

• Approval of the Group’s operating plan;

• Maintaining oversight of the Group’s risk management

framework, its operational resilience and approval of its risk

appetite statement;

• Monitoring the status of the Group’s reputation;

• Approval of updates to the Group’s key policies, including

conflicts of interest, whistleblowing and Board diversity; and

• Progress of recommended actions from the annual evaluations

of Board performance, including further embedding best practice

and developing the resilience and expertise of the Board.

Division of responsibilities

The Board recognises the importance of a clear division of

responsibilities between Executive and Non-Executive roles, and in

particular a clear delineation of the Chair’s responsibility to run the

Board and the Chief Executive Officer’s responsibility for running

the Group’s business. The roles of Chair, Chief Executive Officer

and Senior Independent Director are clearly defined and have been

approved by the Board.

Role of the Chair

The Chair, Deanna Oppenheimer, is responsible for leading the

Board and ensuring that it is effective in discharging its duties.

Her key responsibilities are to:

• Chair the Board, the Nomination Committee and general

meetings of the Company;

• Set the Board agenda and ensure the Board receives accurate,

timely and clear information, and that adequate time is available

for discussion of all agenda items, in particular strategic issues;

• Set clear expectations concerning the Company’s culture, values

and behaviours and the style and tone of Board discussions;

• Demonstrate ethical leadership and promote the highest

standards of integrity, probity and corporate governance

throughout the Company and particularly at Board level,

and generally ensure the effective governance of the Group;

• Promote a culture of mutual respect, openness and debate by

facilitating the effective contribution of Non-Executive Directors,

develop productive working relationships with the Chief

Executive Officer and Chief Financial Officer, and ensure there

are constructive relations between Executive and Non-Executive

Directors generally;

• Encourage all Board members to engage in Board and

Committee meetings by drawing on their skills, experience,

knowledge and, where appropriate, independence;

• Ensure effective communication with the Company’s

shareholders and other stakeholders, and that the Board

is made aware of their views; and

• Ensure that the performance of the Board, its Committees

and individual Directors is evaluated at least once a year

and that the results of the evaluation are acted upon.

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Governance

CORPORATE GOVERNANCE REPORT

SAFEGUARDING FUTURE SUCCESS CONTINUED

Role of Chief Executive Officer

The Board delegates responsibility for the executive leadership

of the Group’s business to its Chief Executive Officer, Chris Hill.

His key responsibilities are to:

• Lead the senior management team in the day-to-day running

of the Group’s business in accordance with the Board approved

strategic objectives;

• Chair the Group Executive Committee in its oversight of the

performance of the Group against the Board approved strategic

objectives and communicate any decisions and

recommendations to the Board;

• Review the operational performance and strategic direction

of the Group’s business;

• Ensure that appropriate systems of internal control and

risk management are in place and operating in accordance

with the Group’s risk appetite approved by the Board; and

• Together with the Chair, provide coherent leadership of

the Group and promote adherence to its culture and values.

Role of Senior Independent Director

The Senior Independent Director plays an important role in

supporting the Chair on governance issues, contributing to the

culture of open and honest communication between the Chair

and the other members of the Board, and providing an additional

point of contact for the Company’s shareholders.

The key responsibilities of the Senior Independent Director are to:

• Assist the Chair by being available to discuss and provide insight

and guidance on issues relating to the Group’s governance, the

performance of the Board and individual Directors, and on any

concerns raised by Directors, the Company’s shareholders or

the Group’s employees;

• Lead the Non-Executive Directors in carrying out the Chair’s

annual performance review. This includes meeting with and

obtaining appropriate feedback from the Non-Executive

Directors without the Chair and Executive Directors present,

monitoring the Chair’s performance throughout the year, and

paying close attention to the relationship between the Chair

and Chief Executive Officer to ensure it is functioning well;

• Lead the process for, and chair the Nomination Committee

when considering, the selection and appointment of a new Chair;

• Facilitate the resolution of disputes between the Chair

and other members of the Board; and

• Be available to address the concerns of the Company’s

shareholders in situations where the Chair, Chief Executive

Officer or Chief Financial Officer have failed to resolve

those concerns, or where contact with those individuals

is inappropriate.

Non-Executive Directors

The role of the Non-Executive Directors is to constructively

challenge and help develop proposals on strategy and play

a leading role in monitoring and scrutinising the performance

of the Group’s Executive management in meeting agreed goals

and objectives.

The Non-Executive Directors are also responsible for determining

appropriate levels of remuneration for the Executive Directors,

and play a prime role in appointing and, where necessary,

removing Executive management.

The Nominated Director is an appointee of a shareholder.

However, all the Non-Executive Directors are independent

of management and bring valuable skills, experience and an

external perspective to the business conducted by the Board,

as well as offering specialist advice in their fields of expertise.

The independent Non-Executive Directors also play an important

role as members of the Board’s Committees.

Group Company Secretary

All the Directors have access to the advice and services of the

Group Company Secretary. The Group Company Secretary is

responsible for working with the Chair to develop and maintain

the policies and processes required to enable the Board to

function effectively and efficiently, and for ensuring the Board

has the information, time and resources it needs.

The Group Company Secretary is also responsible for advising

the Board on corporate governance matters and for ensuring

procedures are followed and applicable rules and regulations

complied with.

The appointment and removal of the Group Company Secretary

is a matter reserved for the Board. During the period under review,

the Board appointed Claire Chapman as Group Company Secretary.

Meetings, attendance and information provided

to the Board

Member

Attended

(excluding ad-hocs)

Deanna Oppenheimer 8 of 8

Chris Hill 8 of 8

Philip Johnson

(resigned 31 Jan 2022)

5 of 5

Dan Olley 8 of 8

Roger Perkin 8 of 8

John Troiano 8 of 8

Moni Mannings 8 of 8

Andrea Blance 8 of 8

Adrian Collins 8 of 8

Penny James

(appointed 1 Sept 2021)

7 of 7

Amy Stirling

(appointed 21 Feb 2022)

3 of 3

Board meeting attendance shown for all scheduled Board meetings

during the year noting that on occasion ad-hoc meetings also took

place to deal with timely matters.

Supported by the Group Company Secretary, the Board is satisfied

that it has the policies, processes, information, time and resources

required in order for it to function effectively and efficiently.

Comprehensive Board packs and agendas are circulated prior

to meetings to ensure Directors have the opportunity to consider

the issues to be discussed so that more time at meetings can

be dedicated to constructive challenge and strategic discussion.

Directors are expected to attend all meetings. However, when a

Director is unavoidably unable to attend all or part of a meeting,

he or she is able to provide comments on the papers to the Chair

before the meeting.

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Report and Financial Statements 2022

Governance

CORPORATE GOVERNANCE REPORT

SAFEGUARDING FUTURE SUCCESS CONTINUED

Outside of the scheduled Board cycles, the Board may meet to

discuss or otherwise consider and approve matters on an ad hoc

basis, such as appointments to the Board and other senior

positions within the Group, or other material and time critical

matters. The Non-Executive Directors also meet periodically

without the Executive Directors present. These sessions have

been held via a mixture or remote, hybrid and face to face

meetings to make best use of time and work efficiently.

The Board also met with members of the Group Executive

Committee and other senior management, including an in person

Strategy Day to develop and refine Group Strategy. There have

also been a number of ‘drop in’ sessions during the year for the

Board with members of the Group Executive Committee covering

items including: ICARA; FCA’s Consumer Duty; and a range of

subjects contributing to HL’s Strategy including: technology;

service, advice and growth.

Board independence and time commitments

The structure, size and composition of the Board is regularly

reviewed to ensure that the balance between Executive and

Non-Executive Directors allows it to exercise objectivity and that

no individual or small group of individuals dominates decision

making. Each of the Non-Executive Directors is considered to be

of sufficient calibre and experience to bring significant influence

to decision making.

On her appointment as Chair, Deanna Oppenheimer satisfied

the independence criteria set out in the Code.

The Board considers that each of Andrea Blance, Moni Mannings,

Penny James, Dan Olley, Roger Perkin, Darren Pope and John

Troiano are independent. In each case when assessed against

the criteria set out in the Code. Adrian Collins is not considered

independent because he is appointed by a major shareholder.

Throughout the period under review, the Board has therefore

satisfied the Code requirement that at least half of the Board,

excluding the Chair, comprises Non-Executive Directors

determined to be independent.

The Board considers that each of the Non-Executive Directors has

sufficient time to meet their responsibilities both to the Board and

any Committees of which they are a member. Board members are

required to disclose significant time commitments prior to their

appointment, and candidates’ existing time commitments are taken

into account by the Board when considering new appointments.

Directors are required to consult the Board prior to undertaking

any additional external appointments.

The independence and time commitments of the Non-Executive

Directors are kept under review by the Nomination Committee.

Details of its oversight of these matters can be found on page 110.

Neither of the Executive Directors currently holds any significant

external appointments.

During the year it was announced that Deanna Oppenheimer would

join IHG plc as Chair elect from 1 June 2022. In respect of Deanna’s

appointment, the HL Board considered, as it does when any Board

member takes on a new role, the impact this appointment could

have on her ability to continue her significant contribution to HL

as Chair. Additionally, the Board took into account the views that

major shareholders have generally expressed as part of their

ongoing stewardship obligations, and recognised the observations

made by some that time commitments must allow for the flexibility

for a Non-Executive Director to have capacity for both planned

and for unforeseen events.

Having carried out the review, the Board is satisfied that Deanna’s

new appointment does not have any impact on her ability to

continue as HL Chair. The Board is satisfied that there is no conflict

given the sector IHG plc operates in and, in the last 24 months,

Deanna has freed up her time by stepping down as NED at

both Whitbread plc, where she had also served as Remuneration

Committee Chair, and Tesco plc. At Tesco plc she had served as

both the SID and Remuneration Committee chair and also sat on

the Tesco Bank Board. Deanna’s ability to take up the IHG plc role

and to continue as HL’s Chair was made possible by her reduced

time commitments overall.

Composition, succession and evaluation

Board composition, balance and diversity

The Nomination Committee regularly reviews the size, structure

and composition of the Board and its Committees to ensure

an appropriate and diverse mix of skills, experience, knowledge,

backgrounds and personal strengths. The Non-Executive Directors

have strong and relevant experience across all aspects of financial

services and the Board as a whole is considered to have an

appropriate balance of skills and experience for the requirements

of the Group’s business.

Diverse pools of candidates are considered for vacancies and

in succession planning, and any appointments are based on merit

and objective criteria. Further details on the Group’s approach to

diversity and inclusion when considering Board appointments and

succession planning, and how the approach promotes diversity

of gender, social and ethnic backgrounds, cognitive and personal

strengths, can be found in the Nomination Committee report on

pages 107 to 110.

Board composition

Non-Executive

Directors

Chair

Executive

Directors

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Report and Financial Statements 2022

Governance

CORPORATE GOVERNANCE REPORT

SAFEGUARDING FUTURE SUCCESS CONTINUED

Length of tenure

4–6 years

0–3 years

Board diversity

Male

Female

On joining the Board, Non-Executive Directors receive a formal

letter of appointment setting out the time commitment expected

of them. Once they have met all approval and induction

requirements, Non-Executive Directors are currently expected

to commit a minimum of 30 days per annum to their roles. This

expectation is calculated based on attendance at and preparing

for Board meetings, meeting with senior management and the

Company’s shareholders, and attending strategy days, Board

dinners and training. Additional time commitments may apply

where a Non-Executive Director takes on an additional role such

as chairing a Committee.

Induction and professional development

The Chair is responsible, with the support of the Group Company

Secretary, for arranging a comprehensive induction programme

for all new Directors. Inductions are tailored to the individual

following a skills gap analysis, and have regard to their

background, knowledge and previous experience both

professionally and as a Director.

Consideration of the length of service of Directors is a key element

of the wider consideration of Board composition and succession

planning, and for Non-Executive Directors it is an important aspect

that is considered in determining continued independence. The

Group maintains clear records of the terms of service of the Chair

and Non-Executive Directors to ensure continued compliance

with the tenure requirements in the Code. The Chair has held the

position since her appointment to the Board in February 2018 and,

as at the date of this report, none of the Non-Executive Directors

has served on the Board for more than nine years from the date

of their first appointment.

Director election and re-election

In accordance with the requirements of the Code and the

Company’s Articles of Association, all Directors will stand for

election or re-election, as relevant, at this year’s AGM. Information

on how the Board evaluates the effectiveness and contribution

of each Director can be found in the Nomination Committee report

on pages 107 to 110. The Notice of AGM will include specific details

of why the Board considers that the contribution of the Directors

seeking election or re-election is, and continues to be, important

to the Group’s long-term sustainable success.

Board appointment process

The Nomination Committee leads the process for Board

appointments, details of which can be found in the Nomination

Committee report on pages 107 to 110.

Non-Executive Directors are appointed for fixed terms of three

years, subject to election or re-election by the Company’s

shareholders at each AGM. At the end of each term, Non-Executive

Directors may be appointed for further three-year terms provided

the Board is satisfied with the individual’s performance and that

he or she remains independent and able to devote sufficient time

to the role.

Induction programmes include meetings with a variety of key

stakeholders to provide the Director with a thorough overview of

the Group’s business and the environment within which it operates.

This includes meetings with the Chair, Chief Executive Officer,

Chief Financial Officer and other members of the Board, as well as

meetings with senior management, heads of business areas and

technical experts, to gain a detailed insight into the operation of

the business and its culture. The Group Company Secretary and

Group Chief Risk Officer will also meet with the Director to provide

an overview of the Group’s corporate governance and risk

management frameworks respectively.

An ongoing programme of training is available to all members of

the Board. During the period under review, this has included a

training session for the Board on the FCA’s Consumer Duty and the

ICARA and support for the Board’s Committees in discussions on

relevant topics such as: developments in audit best practice; and

the impact of the Investment Firm Prudential Regime. The Board

also carries out periodic ‘deep dives’ into specific areas of the

business in order to broaden the Board’s understanding of the

Group’s business and the opportunities and challenges it faces.

The Board carried out deep dive sessions on return to office, ESG,

operational resilience, the HL Way and cyber security – taking into

account the Russian invasion of Ukraine, and held a number of

workshops on a range of subjects contributing to the strategy

including: technology, services, advice and growth.

Training is also arranged to align to any specific development

needs identified by the annual Board evaluations, and individual

Directors are encouraged to devote an element of their time to

self-development.

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Report and Financial Statements 2022

Governance

CORPORATE GOVERNANCE REPORT

SAFEGUARDING FUTURE SUCCESS CONTINUED

Audit, risk and internal control

Audit

The Board is responsible for establishing the policies and

procedures that ensure the independence and effectiveness

of the Group’s Internal Audit function and the external auditor,

and for satisfying itself as to the integrity of the financial and

narrative statements in the Report and Financial Statements.

The Board delegates responsibility to its Audit Committee to

oversee the Group’s Internal Audit function and the Group’s

relationship with its external auditor. The Audit Committee is also

responsible for monitoring the integrity of the Group’s financial

reporting and the processes and controls that support it, and

for advising the Board as to whether the Report and Financial

Statements provide a fair, balanced and understandable

assessment of the Company’s position and prospects.

The main features of the Group’s internal control and risk

management systems that ensure the accuracy and integrity

of its financial reporting include:

• The utilisation of appropriately qualified and experienced

colleagues, and regular knowledge sharing within the team;

• The use of appropriate information security and access

controls around the key systems used in the Group’s financial

reporting processes;

• Appropriate segregation of duties to ensure that no individual

controls the end-to-end process;

• Continuing enhancements to the Group’s Risk Management

Framework including robust risk identification, assessment

and management;

• Detailed processes and controls around the reconciliation

of the Group’s office accounts, the recognition of revenue

and the Group’s tax balances, and payment processes; and

• A detailed process of reconciliation and review by management

of data extracted from the general ledger system for the

production of management accounts.

Further details can be found in the Audit Committee report on pages

74 to 78. Statements from the Board as to the adoption of the going

concern basis for preparing the financial statements and the Board’s

responsibility for preparing the Report and Financial Statements

can be found on page 117 of the Directors’ Report and the

Statement of Directors’ Responsibilities on page 122 respectively.

Risk management and internal controls

The Board is responsible for establishing procedures for risk

management and for monitoring the Group’s risk management

framework and system of internal controls. The Board is also

responsible for determining the nature and extent of the principal

risks the Group is willing to take in order to achieve its long-term

strategic objectives. Supported by the Risk Committee, the Board

carries out a robust assessment of the Group’s emerging and

principal risks when assessing the prospects of the Company over

the longer term. The outcome of that assessment, along with a

description of the Group’s principal risks, the procedures in place

to identify emerging risks, and an explanation of how these risks

are managed or mitigated can be found on pages 51 to 59 of the

Strategic Report.

A description of the main features of the Group’s risk management

and internal control systems, including the ‘three lines of defence

model’, can be found on pages 51 to 59 of the Strategic Report.

The Board delegates responsibility for monitoring those systems

to its Audit and Risk Committees, and each carries out an annual

review of their effectiveness on the Board’s behalf. Together,

this review covers all material controls, including financial,

operational and compliance controls and risk management

systems. Further details can be found on page 77 of the Audit

Committee report and page 112 of the Risk Committee report.

The crossover of membership between the Audit Committee

and Risk Committee assists in the exchange of relevant issues

and the facilitation of associated discussions.

Following review by its Committees, the Board is satisfied that

the Group’s risk management and internal control systems are

adequate and have continued to improve throughout the period

under review. The Board continues to encourage the enhancement

of the Group’s risk maturity, aligned to the Group’s scale and

complexity as it continues to grow and implement the new strategy.

Further information of the enhancements planned can be found

on page 113 of the Risk Committee report.

Remuneration

The Group’s remuneration policies and practices are designed

to support its strategic objectives and promote its long-term

sustainable success. A summary of how the Company has

complied with the remuneration requirements set out in the

Code, along with details of the Remuneration Committee’s

activities during the period under review, the levels of Directors’

remuneration and a summary of the current Directors’

Remuneration Policy, can be found on pages 79 to 106.

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Hargreaves Lansdown

Report and Financial Statements 2022

Governance

ENSURING THE CONTINUED

INTEGRITY OF THE GROUP

AUDIT COMMITTEE REPORT

Dear Shareholder

As Chair of the Audit Committee, I am pleased to present this

report on the Committee’s activities in the year under review.

Role of the Audit Committee

The Committee assists the Board in ensuring that the interests

of the Company’s shareholders are protected in relation to the

Group’s financial reporting and internal controls. The Board

delegates responsibility to the Committee to monitor the integrity

of the Group’s financial reporting and the processes and controls

that support it. This includes reviewing and challenging the

appropriateness of accounting policies, significant issues and

judgements, and the assumptions in support of the Company’s

ability to continue as a going concern and its longer-term viability.

A key aspect of the Committee’s role in ensuring the integrity of the

financial reporting is its oversight of the Group’s relationship with the

external auditor. This includes making recommendations to the Board

in relation to the appointment of the external auditor, approving its

scope of work, fees and terms of engagement, as well as regularly

reviewing its independence, objectivity and effectiveness.

More broadly, the Group’s internal control framework is an essential

part of ensuring the integrity of its financial reporting and other

business operations. The Committee oversees the effectiveness

of, and ongoing improvements to, the Group’s internal controls,

as well as having responsibility for monitoring and reviewing the

effectiveness of the Group’s Internal Audit function, which provides

assurance on those controls.

Following a review of the Committee’s terms of reference

in October 2021, the main compliance responsibilities were

transferred to the Risk Committee to align with its existing

responsibilities. The detailed responsibilities of the Committee

are set out in its terms of reference, which are available on the

Group’s website at www.hl.co.uk/about-us/board-of-directors.

This report provides an overview of how the Committee has

discharged its responsibilities during the period under review.

Composition and meeting attendance

Roger Perkin (as Chair), Andrea Blance and John Troiano, each of

whom is an independent Non-Executive Director, are the members

of the Committee as at the date of this report and have been

throughout the period under review.

The Board has satisfied itself that the Committee as a whole

has an effective balance of skills and experience to perform its

responsibilities. Each of Roger Perkin, Andrea Blance and John

Troiano have significant experience of the asset management

sector and the wider financial services industry. Roger Perkin

has recent and relevant financial experience and competence

in accounting and audit.

Ongoing training is provided to assist Committee members

in performing their duties. During the period, this has included

a briefing from the external auditor on developments in relation

to technology controls.

The Committee met seven times in the period under review.

The attendance of members at meetings across the year is set

out in the table opposite. Other individuals attend Committee

meetings at the request of the Committee Chair. This will usually

include the Chair of the Board, the Chief Financial Officer, the

Chief Internal Auditor and the external auditor. The Committee

has access to the Group Company Secretary, whose nominee

acts as secretary to the Committee. The Committee is authorised

to obtain independent professional advice where it considers

it necessary.

Attendance at Committee meetings

during the year to 30 June 2022

Member Position

Eligible

meetings

Attended

meetings

Roger Perkin Chair ••••••• •••••••

Andrea Blance Independent

Non-Executive

Director

••••••• •••••••

John Troiano Independent

Non-Executive

Director

••••••• •••••••

Ensuring oversight of

financial reporting and

the control environment.

Roger Perkin

Chair of the Audit Committee

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Governance

AUDIT COMMITTEE REPORT

ENSURING THE CONTINUED INTEGRITY OF THE GROUP CONTINUED

Overview of the Committee’s activities

in the year to 30 June 2022

19%

External Audit

17%

Internal Audit

Internal

Controls

Whistleblowing

21%

Financial

Reporting

29%

Governance

and Other

Financial statements

The Committee is responsible for monitoring the integrity of

the Group’s financial statements, including its interim and full

year results. Where practicable, and consistent with regulatory

requirements, it also reviews other statements requiring Board

approval which contain financial information, including the Group’s

Sustainability Accounting Standards Board (SASB) disclosure.

In carrying out this role, the Committee reviews and challenges

the application of significant accounting policies across the

Group that feed into its financial statements, and the methods

used to account for significant or unusual transactions. Significant

examples considered by the Committee during the period include:

• The application of IAS 38 (Intangible Assets) in relation to the

amounts held by the Group’s subsidiaries including internally

developed software and goodwill.

In each case the Committee reviewed and challenged

management on the appropriateness of these accounting policies

and how they were applied to the Group’s financial statements.

The Committee also considers the accounting estimates and

judgements made, and any significant issues that have arisen,

in preparing the Group’s financial statements. It scrutinises the

clarity and completeness of related disclosures to ensure they

are set properly in context. In doing so, it pays due regard to

any related correspondence with the external auditor and any

material adjustments resulting from the external audit. In the

period under review, the Committee has concluded that there

were no significant issues requiring judgements to be made in

relation to the financial statements. In arriving at this conclusion,

the Committee considered the following:

• Revenue recognition. The Committee considered the veracity

of the Group’s revenue streams in the period, which continue to

be non-complex and primarily consist of high-volume, low value

transactions. The Committee receives assurance on revenue

calculations both internally through its oversight of the Group’s

CASS controls and from the external auditor’s approach to

recalculating the Group’s significant revenue streams and

carrying out sample testing on the remainder. In addition, the

external auditors reviewed and sample tested the operational

transactions that drive the revenue to ensure that these were

being booked in a timely and accurate fashion.

• Going concern. The Committee reviewed the going concern

position for each group entity.

• Carrying value of investment in subsidiary. The valuation

model of HLSL was reviewed in detail by the Committee

and they concluded that a £5 million impairment of HL plc’s

investment in HLSL was required. They also reviewed the

capitalised development cost in HLSL against this model and

concluded that no impairment was required. Full details of the

value of intangible assets capitalised and the policies applied

can be found in note 2.2 to the consolidated financial statements

on pages 140 to 141.

• Tax. The Committee received reporting on and considered tax

matters impacting the Group, including overseas withholding tax,

FATCA and HMRC’s Corporate Criminal Offence.

• COVID-19. The Committee continued to consider the potential

impact of the COVID-19 pandemic on the Group’s performance

and financial reporting. In addition, the Committee has spent

additional time with both the Group’s Finance and Internal Audit

functions to receive assurance on the quality of the Group’s

financial reporting and any issues and judgements made in

connection with its preparation.

• Contingent liabilities. The Committee reviewed and carefully

considered the contingent liabilities for the Group. Full details

of the matters considered can be found in note 5.3 to the

consolidated financial statements on page 151.

• FRC Correspondence. During the financial year, the Group

corresponded with the FRC about its 2021 Report and Financial

Statements. In March 2022, as part of its corporate reporting

review function, the FRC requested information about the

accounting implications for potential litigation against the

company in respect of the LF Equity Income Fund (formerly

Woodford Equity Income Fund) that had been reported in the

media. The Group explained in its correspondence with the FRC

that a pre-action letter had been received from a legal firm in

March 2021. The Group clarified that in June 2021, it had issued

a letter in response which rejected all the claims made for lack

of a substantive basis of claim. The Group informed the FRC that

no formal litigation or group legal action had commenced as at

the date of issuing the 2021 Report and Financial Statements,

or since. This remains the case as at the date of this report.

• Remuneration. The Committee considered the accounting

impact of the proposed changes to a new Sustained

Performance Plan within the Remuneration Policy. Changes

relate to deferral rates and vesting periods and are driven

from the requirements of the Investment Firm Regulation and

Investment Firm Directive along with shareholder feedback.

As Hargreaves Lansdown Asset Management Limited is an

enhanced firm under the Senior Managers & Certification Regime

but does not have a separate Audit Committee, the Committee

reviewed the Hargreaves Lansdown Asset Management Limited

accounts for recommendation to the board of that company.

Alternative Performance Measures

The Committee reviewed and challenged the classification

and monitoring of costs related to our updated strategy.

Report and Financial Statements and interim results

In addition to considering significant accounting issues, policies

and judgements throughout the year, the Committee plays an

important role in the production of the Report and Financial

Statements and interim results. This includes reviewing and

challenging the assumptions that support the use of the going

concern basis for the preparation of the financial statements

and the statement given by the Directors as to the Company’s

longer-term viability, which can be found on page 54.

The Committee also undertakes a wider review of the content

of the Report and Financial Statements to advise the Board as to

whether, taken as a whole, it is fair, balanced and understandable

and provides the information necessary for shareholders to

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Report and Financial Statements 2022

Governance

AUDIT COMMITTEE REPORT

ENSURING THE CONTINUED INTEGRITY OF THE GROUP CONTINUED

assess the Group’s performance, business model and strategy.

This supports the Board in providing the confirmations set out

on page 122.

In considering the wider content of the Report and Financial

Statements, the Committee pays particular attention to ensuring

the narrative sections provide context for, and are consistent with,

the financial statements, and that an appropriate balance is struck

between the articulation of successes, opportunities, challenges

and risks. In addition to considering its content, the Committee

also oversees the process for preparing the Report and

Financial Statements.

In particular, the Committee has ensured that an appropriate

senior manager is accountable for the preparation of each section,

with overall responsibility for coordinating production being

assigned to the Chief Financial Officer.

External Audit

The Committee is responsible for overseeing the Group’s

relationship with its external auditor, PwC, which has been retained

since the Group’s last competitive tender process run in relation

to the financial year ended 30 June 2014.

In addition to oversight of the audit process itself, the Committee

is responsible for monitoring the Group’s other interactions with

the external auditor to ensure that its independence and

objectivity are maintained.

External audit process

During the period, the Committee has overseen the end-to-end

audit process. The Committee reviewed and approved the external

auditor’s engagement letter and the detailed audit plan to ensure

appropriateness of scope. In approving the proposed audit fees,

the Committee paid particular attention to ensuring they were

appropriate to enable an effective and high-quality audit.

The external auditor provided an update to the Committee at its

June meeting on progress of the audit, before submitting a formal

report in August following the completion of the audit process.

The Committee reviewed the findings with the external auditor,

which included a discussion of key audit and accounting matters

including significant judgements of which there were determined

to be none, and its views on its interactions with management.

The Committee also reviewed and recommended to the Board that

it signs the representation letter requested by the external auditor

in respect of its audit of the financial statements. The views of

the external auditor were also sought at the Committee’s meetings,

which included sessions without management present to discuss

its remit and any issues arising from the audit.

External auditor effectiveness and independence

The Committee is responsible for assessing the qualifications,

expertise and resources of the external auditor, and for reviewing

the effectiveness of the audit process. In discharging these

responsibilities, the Committee has considered information

from a variety of sources. It received a report from the external

auditor on its own internal quality control procedures, which

included reference to the outcome of the FRC’s 2021/22

AQR inspection report.

The Committee regularly receives reports from the external auditor

on the progress of its audit activities. The Committee reviews the

contents of these reports and the level of professional scepticism

and challenge of management judgements. Where appropriate,

the Committee tracked the management response to external

audit findings to ensure a satisfactory outcome to any challenges

raised. The views of management and the Committee members

were also sought on the efficiency of the year end process and

the performance of the external auditor. In conclusion, it was

noted that the external auditor has demonstrated challenge

and professional scepticism in performing its role.

In addition to its effectiveness, the Committee is responsible for

monitoring and assessing the independence and objectivity of the

external auditor. In doing so, the Committee has considered the

FRC’s Revised Ethical Standard 2019, and paid particular attention

to the Group’s wider relationship with the external auditor through

its provision of non-audit services to the Group, to the rotation

of the senior audit partner, and to the external auditor’s tenure

with the Group, further information on which can be found below.

The Committee received a report from the external auditor

confirming that, in line with the FRC’s Revised Ethical Standard

2019 and having regard to the threats and safeguards to

independence, it had concluded that there were no matters

that impaired or restricted its objectivity as auditors to the Group.

Having considered the information and views presented to it,

the Committee has concluded that the external audit process

was effective, that it is satisfied with the performance of the

external auditor, and that there are policies and procedures in

place adequately to protect the independence and objectivity

of the external auditor. Accordingly, the Committee has

recommended to the Board that a resolution is put to the

Company’s shareholders at the upcoming AGM for the

reappointment of the external auditor.

Non-audit fees

The Committee considers its oversight of the non-audit services

provided to the Group to be a key component of discharging its

responsibility for monitoring the independence and objectivity

of the external auditor. In addition to the report the Committee

received from the external auditor concerning the threats and

safeguards to its independence, the Committee received and

reviewed reports from the Group’s Finance function prior to the

publication of the Group’s interim and full year results on all

non-audit services provided to the Group by the external auditor

during the period under review.

The Committee has responsibility for developing and

recommending to the Board the Group’s policy on non-audit

services supplied by the external auditor. The policy is specifically

designed to ensure that the external auditor’s independence

and objectivity is maintained. It sets out a number of permissible

non-audit services which the external auditor may carry out

in line with the FRC’s Revised Ethical Standard. In particular,

the Committee considers that it is desirable that the external

auditors also perform the assurance services required by

regulation in respect of CASS and Safeguarding as this provides

significant efficiencies in the audit process and, in its judgement,

the threats to the auditors’ independence are clearly insignificant.

All non-audit services must be approved in advance by

the Committee.

The policy also specifies, in line with the FRC’s Revised Ethical

Standard 2019, that the maximum non-audit fees that the external

auditor can receive from the Group is 70% of the average of the

audit fees incurred by the Group over the previous three years.

Assurance services in relation to CASS and Safeguarding are

specifically excluded from the fee cap. The full policy can be

found on the Group’s website at www.hl.co.uk/about-us/

board-of-directors/corporate-governance.

During 2022, the Group paid PwC £1,036,000 (FY21: £806,000)

for audit and related assurance services and £101,000 (FY21:

£90,000) for other assurance services, giving a total fee to PwC

of £1,137,000 (FY21: £896,000). Further information on Auditors’

Remuneration is set out in Note 1.4 to the Financial Statements.

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Report and Financial Statements 2022

Governance

AUDIT COMMITTEE REPORT

ENSURING THE CONTINUED INTEGRITY OF THE GROUP CONTINUED

Tenure of the external auditor

The Company has complied throughout the period under review

with the provisions of The Statutory Audit Services for Large

Companies Market Investigation (Mandatory Use of Competitive

Tender Processes and Audit Committee Responsibilities) Order

2014, including the tenure of the Group’s external auditor, the

tender process for auditor appointments and Audit Committee

responsibilities.

The lead audit partner for the period under review was Darren

Meek, in his second year of appointment. The Company considers

that, taking account of the controls in place to maintain the

external auditor’s independence and objectivity, the relationship

the Group has developed with PwC is conducive to an efficient

and effective audit, and that it is therefore in the best interests of

the Company’s members as a whole to maintain that relationship

for the financial year ending 30 June 2023.

Given the Group appointed PwC as its external auditor following

a tender process in respect of the financial year ending 30 June

2014, the Group was required to undertake a formal, competitive

tender process in respect of the financial year ending 30 June

2024 at the latest. To allow sufficient time for a transition period,

should it be needed, and to enable an incoming auditor to become

independent following any appointment decision, the Company

conducted the tender process during the period under review.

Audit quality was of paramount importance in key selection

criteria. The Committee retained ultimate authority over the tender

process and the scope of the tender consisted of the HL Group

audit and statutory audits of all Group companies (excluding

dormant companies and those subject to exemption from audit),

as well as the performance of assurance services required by

regulation in respect of CASS and Safeguarding.

To ensure a transparent and robust selection process, a panel

was established to manage the process, chaired by the Committee

Chair and including the Chief Financial Officer. The panel was

responsible for overseeing the design and execution of the audit

tender, including agreeing the key objectives and evaluation

criteria. All firms were requested to confirm their independence

on acceptance of the request for proposal and to provide details

of any matters of which they were aware that could have an

impact on independence, which were reviewed against internal

agreements and proposals in place.

In order to be successful in the audit tender, the firms were

evaluated on the following selection criteria:

• Audit quality;

• Strength and experience of the audit team;

• Understanding of HL, its business and industry;

• Audit approach;

• Ability to create effective working relationships; and

• Commercials.

The tender resulted in a recommendation to the Board in June in

respect of the audit of the financial statements for the year ending

30 June 2024 and subject to member approval at the 2023 AGM.

Subject to continuing satisfactory performance, members will be

invited to vote, at the Company’s AGM, to reappoint PwC. The next

tender process will be mandatory after no more than ten years.

Internal controls

In conjunction with the Risk Committee, the Committee provides

assurance to the Board on the Group’s system of internal controls.

A key aspect of this is the review of the financial control systems

that identify, assess, manage and monitor financial risks, which

are an important aspect of ensuring the integrity of the Group’s

financial statements as a whole.

As part of its oversight of the Group’s wider system of internal

controls, the Committee receives reports from management

on the effectiveness of those controls, as well as independent

assurance on the effectiveness of controls by the Group’s Internal

Audit function and the external auditors. During the period,

the Committee has:

• Received regular reports from the Group’s Internal Audit function

on the sufficiency of the internal controls in those areas of

the business included in the Internal Audit Plan for the period.

Specific areas of focus in the period have included operational

resilience, IT, governance and the systems and controls that

support regulatory changes. Reporting to the Committee has

also included updates on progress against management actions

identified and a root cause analysis of internal audit observations

over the preceding 12-month period.

• The Committee has also received the Chief Internal Auditor’s

annual assessment of the Group’s internal control framework;

and

• Monitored the status of the Group’s CASS control environment

and the improvements being made. In doing so it has considered

the report from the external auditors on client assets held by the

Group’s regulated subsidiaries and received regular reports from

the Group’s CASS function on the completion of CASS assurance

activity, status updates on remediation activity carried out

as part of the CASS action plan, and management information

on any breaches of significance and associated remediation.

Overall, the Committee is satisfied that the Group’s internal

control and risk management framework comprises adequate

arrangements, actions and mitigating controls. The Committee

recognises that in order to support the continuing growth and

increasing complexity of the Group, there is a need to continue

to invest in improving and strengthening the Group’s risk

culture and the risk management and internal control systems.

Further information on the enhancements can be found on page

113 of the Risk Committee Report. The Committee has reviewed

and approved the statements included in this Report and Financial

Statements relating to risk management and longer-term viability

on page 54 of the Strategic Report and on the adequacy of the

Group’s internal control and risk management arrangements on

page 73 of the Corporate Governance Report.

Whistleblowing

The Group is committed to creating a culture of openness, integrity

and accountability. A formal policy is in place which encourages

colleagues and contractors to raise concerns, in confidence,

about possible wrongdoing in relation to financial reporting or

other matters. Changes to the policy require the approval of the

Board, and the Committee has responsibility for regularly reviewing

the adequacy of arrangements to ensure the proportionate and

independent investigation of matters raised and appropriate follow

up action. These arrangements are viewed as an important internal

control for the Group and the Committee regularly updates the

Board on their operation and instances of concerns raised.

During the period, the Committee received regular reporting on

the Group’s whistleblowing arrangements, including management

information on concerns raised and completion rates for

internal training.

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Report and Financial Statements 2022

Governance

AUDIT COMMITTEE REPORT

ENSURING THE CONTINUED INTEGRITY OF THE GROUP CONTINUED

Internal Audit

The role of the Group’s Internal Audit function is to provide

objective assurance and advice to both the Board and

management on the Group’s internal control and risk management

framework. The Committee plays an important role both in

overseeing the programme of work carried out by the function,

and in monitoring and reviewing its role and effectiveness,

including its objectivity.

The role of the Group’s Internal Audit function is defined by the

Internal Audit Charter, which sets out its objectives, responsibilities

and scope of work.

The function’s detailed work programme is set out in a rolling

12-month Internal Audit Plan, which is reviewed and approved by

the Committee every six months. In doing so, the Committee has

ensured that the Plan is aligned to the Group’s key risks and to

the assurance work being carried out by the Group’s second line

functions and the external auditor. Any modifications to the Plan

are also approved by the Committee.

The Committee monitors the effectiveness of the function

throughout the year to ensure that it is appropriate in the context

of the Group’s overall risk management system and its current

needs. The Chief Internal Auditor is a permanent invitee to the

Committee’s meetings and meets regularly with both the

Committee Chair and its members without management present.

During the period, the Committee received regular reports on

progress against the Internal Audit Plan, the responsiveness

of management in addressing recommended actions, and the

function’s requirements for resource and access to management

and information. The Committee uses this information to assess

the function’s effectiveness and to ensure that it is adequately

resourced and fully equipped to fulfil its mandate and perform

in accordance with the Internal Audit Charter and relevant

professional standards.

Having considered the information provided to it throughout the

period under review, the Committee remains satisfied that the

quality, experience and expertise of the function is appropriate

and that it is operating effectively.

The Committee continues to support the maintenance of the

function’s objectivity. It ensures the Chief Internal Auditor has

direct access to both the Chair of the Board and the Committee

Chair, in each case without the involvement of management,

and they receive reporting directly from the function.

It is also the responsibility of the Committee Chair to set

objectives for the Chief Internal Auditor, appraise his

performance (with support from the Chief Executive Officer)

and recommend his annual remuneration for approval by the

Remuneration Committee.

Audit Committee evaluation

The Committee is required to undertake a review of its

performance at least annually to ensure it is operating effectively

and in line with its terms of reference. This review was undertaken

in April 2022 which confirmed that activities during the period

have been in line with its remit.

Audit Committee priorities for 2022/23

Looking ahead to the next financial year, it is anticipated that

the Committee will focus in particular on:

• Assurance from the Group’s Internal Audit function on the

Group’s governance arrangements and changes to the Group’s

risk profile as a result of the updated strategy;

• The continued impact of changes to the macroeconomic

situation in the UK and globally; and

• Preparations for changes to processes and procedures arising

from the response statement by the Department for Business,

Energy and Industrial Strategy on the future of audit and

corporate governance.

Roger Perkin

Chair of the Audit Committee

4 August 2022

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Governance

DIRECTORS’

REMUNERATION REPORT

ANNUAL STATEMENT BY THE CHAIR OF THE REMUNERATION COMMITTEE

Dear Shareholder

As remuneration Chair, I am pleased to present this Directors’

Remuneration Report for the year ended 30 June 2022 that

sets out how the committee has addressed its responsibilities

during the year and explains the rationale for our decision making.

In doing so, I would also like to thank our shareholders for their

overwhelming support of last year’s remuneration report.

Our purpose is to empower people to save and invest with

confidence. To achieve our purpose, we need to perform well

whilst doing the right thing for all our stakeholders. Over the

last two years Hargreaves Lansdown, like many businesses,

has worked hard to support our people in the aftermath of the

pandemic, shortly followed by the war in Ukraine and cost of

living crisis, and whilst managing a journey towards embedding

our strategy and new ways of working together.

I have set out below an overview of our remuneration philosophy

which is aligned to our values and is designed to support the

strategic priorities of Hargreaves Lansdown by encouraging

client-centric sustainable business performance in the context

of the social and environmental impacts experienced by our

colleagues, our clients and our shareholders.

As announced at our Capital Markets Day in February, we have

reached an inflection point in UK wealth management – now is

the time for HL to move forward in this huge and growing market

opportunity. We look forward to a period of transformation and

over the next year we will reflect on our approach to remuneration,

with input from our wider workforce as well as feedback from our

shareholders, to ensure that it fully aligns with our strategic goals.

This is the beginning of a time of review before we submit our

policy again to shareholders at the 2023 AGM, three years since

shareholders approved it in 2020. I look forward to engaging with

our major shareholders during the forthcoming financial year to

hear your reflections on our approach to executive remuneration

as we determine whether our current remuneration policy remains

appropriate for the coming years and what, if any, aspects could

work better in ensuring our approach to pay reflects and supports

the strategy and purpose of Hargreaves Lansdown in future.

A purpose centred on our clients and the long term

Our purpose is to empower people to save and invest with

confidence and our pay philosophy for all colleagues aligns

to this and aims to:

• Reward client-centric sustainable performance aligned

to our purpose and values;

• Share in the success of the Company and align colleagues’

interests with those of shareholders;

• Recognise our colleagues who deliver exceptional client

service the HL Way;

• Attract, retain and motivate a diverse range of talented

colleagues who live our culture and values;

• Encourage colleagues to save over the long term, in line

with our Company purpose; and

• Offer flexibility to meet the needs of a diverse workforce.

Alignment of performance metrics to transparently evidence

delivery of our strategy will remain important anchors, particularly

in the context of our strategy of transformation announced at

our Capital Markets Day in February. We will reflect any further

adjustments to the Directors’ Remuneration Policy and present

this to shareholders at next year’s AGM.

1 Votes cast for the 2021 report 95.52%.

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Report and Financial Statements 2022

Governance

ANNUAL STATEMENT BY THE CHAIR OF THE REMUNERATION COMMITTEE

CONTINUED

Business context in 2022

This year has been a difficult year for so many and the uncertain

and challenging external environment has led to reduced market

and investor confidence. Whilst we cannot control the external

factors impacting our business outcomes, management have

acted on what they can control and have delivered a healthy

statutory Profit Before Tax (PBT) (albeit below threshold) and

dividend outcome, through a focus on key revenue drivers,

our client service excellence and robust cost control.

Despite reduced investor confidence, we have continued to

grow both in terms of net new business and client numbers, whilst

also ensuring strong client retention and satisfaction. In addition,

the executive team have delivered a significant amount of activity

aligned with our strategic priorities, notably the launch of the HL

Growth Fund, partnering with two new banks in Active Savings,

and driven operational resilience improvement in line with

regulatory deadlines. We are also continuing to deliver against

a stretching ESG agenda in line with the values of our business.

In determining Executive Director bonuses, the Committee

reviewed the formulaic out-turns based on financial and

non-financial performance in key areas of focus. Given the targets

were set before the strategy was set and did not take account

of a planned £175 million strategic spend, the Committee

considered whether to adjust targets to reflect strategic spend.

However, in order to maintain transparency and consistency,

it determined this was not the right approach this year but

acknowledged it was appropriate to take account of strategic

spend when setting FY23 targets. The Committee also

considered carefully:

• Whether the overall outcomes aligned with the wider

stakeholder experience;

• The change in share price over the period;

• The intention by the Board to pay a full year dividend; and

• The progress this year against key strategic priorities crucial

to the long-term success for the Company.

Finally, the Committee noted wider workforce bonus outcomes

were stronger than those determined for Executive Directors,

which are substantially lower than in the previous year.

This is the first year that we have assessed outcomes under the

Sustained Performance Plan (SPP). This plan was introduced to

reinforce alignment of the interests of participants with those of

our shareholders as well as to support our focus on long-term

stewardship. Awards were subject to underpinning performance

conditions reflecting upon Group financial, risk and personal

performance over a five-year period and I am pleased to announce

that, after careful consideration by the Remuneration Committee,

the underpin has been met in full.

Further details on how awards have been determined for the 2022

performance year as well as grants made during the year are set

out in the annual report on remuneration.

Executive Director changes

On 31 January 2022, Philip Johnson stepped down from the

Board due to personal reasons and he left Hargreaves Lansdown

on 31 May 2022. His pay on leaving was determined in accordance

with his service contract and our remuneration policy. He was

eligible to receive a pro-rated bonus reflecting relevant performance

and his period of employment this year. The bonus outcome

in relation to the outgoing CFO was carefully considered in the

context of performance in the round prior to stepping down from

the Board. In line with the discretion granted to the Committee

under the plan rules he was treated as a good leaver in relation to

his outstanding share awards. Awards remain subject to the extent

performance conditions are met and vest in accordance with their

original time frames. In accordance with the policy, he will maintain

a post-employment shareholding for a period of two years.

Further details of the treatment of Philip Johnson’s remuneration

on stepping down including assessment of his bonus outcome

are provided on page 98.

Amy Stirling has been appointed as CFO with effect from

21 February 2022. Amy joined from Virgin Group where she has

been part of the senior leadership team since September 2016.

When determining the remuneration package of the new CFO,

the Committee took into consideration the wider talent market,

the calibre of the candidate and the experience she brings to the

role. As such her salary has been set at £525,000 and all elements

of her ongoing package are aligned to our Directors’ Remuneration

Policy. For 2022 she received a pro-rated bonus for time in role

during the year.

Further details on her incoming package are provided on page 105

where it is also noted that no buy-out of deferred or share-based

awards was made.

Wider Workforce

Whether it concerns the global pandemic, war in Ukraine, cost of

living crisis or the volatile stock market this financial year has been

an unprecedented time for most colleagues. Whilst we have been

fortunate to have high demand for our services, our colleagues

had to deal with the significant pressure that this has put on our

teams, alongside navigating the unprecedented challenges of the

wider environment.

In August 2021, we made a one-off special award to thank our

colleagues for working together and supporting our clients through

this challenging pandemic period. In May 2022, in recognition of

the unprecedented combination of factors impacting the finances

of colleagues, we provided a one-off ‘breathing space’ payment

to those we concluded would be most impacted (based on salary

level) and to address the effect on their financial resilience.

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Report and Financial Statements 2022

Governance

ANNUAL STATEMENT BY THE CHAIR OF THE REMUNERATION COMMITTEE

CONTINUED

As a responsible market-leading employer, we regularly review

and benchmark salaries in line with our market comparators.

In response to the most recent review, this year, we made some

immediate changes to the pay levels of our entry level roles.

Building and maintaining a strong colleague value proposition that

ensures colleagues are rewarded fairly and that we are competitive

in the market is fundamental to ensuring the success of HL. I am

excited about the proposed programme aimed at evolving our

colleague value proposition to support our new strategy and look

forward to providing further updates next year.

The colleague voice plays a key role in our decision making

process, to ensure that we do the right thing for our clients,

colleagues, and community. This year, we launched pay and

culture employee listening sessions where members of the Board,

ExCo and the Senior Management Team listen to what colleagues

have to say on topics around pay, progression and culture at HL.

The HL Colleague Forum (set up in January 2019) focuses on

gathering colleague feedback on key strategic decisions including

remuneration, culture and strategy. Additional operational focused

forums, such as our policy user group, help us to successfully

implement our response to the feedback gathered during the

Colleague Forum. In 2021, the Colleague Forum provided feedback

on HL’s culture, strategy and pay (including Executive remuneration

approach) where colleagues were generally excited about the

direction of the strategy. However, they also expressed a desire

for more granular detail so they could better understand their part

in delivery against the strategy and performance expectations

across all levels.

Areas of focus for the forthcoming year

In 2022 we announced the evolution of our strategy and we

have a very clear vision of the future service that HL can provide.

The delivery of this strategy will encompass the whole business,

as we optimise the way we work together to execute on the next

stage of HL’s growth.

In respect of the 2023 financial year, I would like to highlight

the following:

• The Committee determined that with the addition of underlying

cost as a new measure, the existing Executive Director bonus

metrics were relevant for assessment of performance in the

year ahead. As such, these metrics have been aligned to the

five strategic pillars that support the strategy, ensuring that

at least 50% is weighted to financial/growth measures as

prescribed in the policy.

• In addition, the Committee determined that assessment of

ESG considerations should become part of Group performance

(instead of as part of personal performance as for 2022).

• For 2023, personal contribution (20%) will be assessed with

reference to the achievement of strategic delivery.

• In accordance with the policy and IFPR (the Investment Firm

Prudential Regime), bonus awards granted in respect of 2023

will be subject to a six-month retention period.

• The CEO will receive a 4.3% salary increase; the second part of

a two-stage salary increase agreed by shareholders in October

2020. This is less than the average increase to the wider

workforce below Executive Director. Furthermore, this year’s

pay review has focused on those colleagues below our senior

leadership who are experiencing the impact of cost of living and

inflationary pressures. The CFO’s salary is unchanged having

only recently been set at appointment.

• As set out in last year’s Report and Financial Statements,

the CEO’s bonus opportunity for 2023 will be 400% of salary,

with target opportunity reducing to 200%. The CFO’s bonus

opportunity will be 350% in line with 2022. Opportunities are in

line with the maximum under the Directors’ Remuneration Policy.

Any bonus awarded will be delivered in a combination of cash

and shares as required by regulation.

• The changes to the CEO’s base salary and bonus opportunity

represent final steps of increases in response to a redesign

of the bonus in 2021 to reduce the target payment to 50% of

the maximum opportunity previously agreed by shareholders.

• The current intention is for SPP award levels to remain

unchanged from prior years and in line with the shareholder

approved Remuneration Policy at 50% of salary, subject to

the Committee’s consideration of wider context at the time of

vesting. Where the Committee considers that there has been

a misalignment between outcomes and business performance

during the period, the Committee has the discretion to amend

vesting of outcomes. See page 86 for further details regarding

the underpin criteria for the SPP award.

The approach to Executive Director remuneration is set out in

greater detail including detail on performance measures in the

annual report on remuneration.

We continue to review our remuneration approach throughout the

organisation to ensure we remain compliant with our governance

and evolving regulatory requirements. As part of this, although

significantly aligned already, we have continued to undertake a

review of our internal processes and documentation in response

to the changes in the Investment Firm Prudential Regime in order

to implement these requirements in line with the required

time frames.

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Report and Financial Statements 2022

Governance

ANNUAL STATEMENT BY THE CHAIR OF THE REMUNERATION COMMITTEE

CONTINUED

Gender pay and diversity

At HL, we believe that building a diverse and inclusive culture

is not simply because it is the right thing to do, but because we

believe it will lead to better outcomes for clients, colleagues, our

community and our business. We believe inclusion and diversity

is everyone’s responsibility, so every colleague has this in their

objectives, ensuring we all play our part.

Our inclusion and diversity strategy has three priority areas and

an aligned action plan to drive progress. This strategy will enable

us to continue to build an inclusive culture and brand where

colleagues feel engaged whilst attracting a broad pool of talent.

Two of our priority areas relate to the progression and retention

of female and ethnic minority talent at HL. We continue to build

accountability into our approach through setting inclusion and

diversity objectives with target metrics for Executive Directors,

Executive Committee members and senior leaders, and through

the regular tracking of progress at the Executive Committee.

In 2022 Executive Directors’ objectives included quantitative

gender and ethnicity targets at a Group-wide level.

Alongside our focus on female and ethnic minority representation,

we have a strong focus on creating an inclusive culture at HL,

recognising that is key to retaining, engaging, and getting the

best out of our colleagues. Progress this year includes winning

a Stepping Up award acknowledging the leadership and support

HL is providing to changing diversity and inclusion across Bristol

and launching the Strive internship scheme, aimed at providing

paid work experience opportunities to Black, Asian and Minority

Ethnic students across the region. The scheme has won an

Institute of Student Employers award for our outstanding

partnership with the University of the West of England.

A full summary of our inclusion and diversity approach, progress

and initiatives can be found on pages 94 to 97. Our 2021 Gender

Pay Gap (GPG) figures show that we reduced all our Mean Gender

Pay Gap, Median Gender Pay Gap and Median Bonus Gap since

the last submission. Our Median Gender Pay Gap continues to

improve year-on-year, from 19.1% to 14.5%, with continued positive

movement since the figures from 2018. Our Mean Bonus Gap has

widened slightly, by 1.2 percentage points in the last year.

These figures reflect the increases in female representation at

Board and Director level because of our strategic focus on hiring

more, promoting more and losing fewer senior women. The trend

for median GPG is forecast to narrow even further next year,

predominantly driven by increased female representation at senior

levels. However, we need to ensure this level of success

permeates down into the organisation to drive long-term change.

We have supported the attraction, retention and progression of

diverse talent through several external partnership, engagements

and representation programme including our ongoing participation

in the 30% Club’s Women Ahead Mentoring programme; nominating

colleagues to participate in the Stepping Up programme, an

award-winning diversity leadership programme, and sponsorship

of RISE2Inspire black-led mentorship programme to support

aspiring entrepreneurs.

Progress in the inclusion and diversity space requires long-term

focus and commitment to drive change; but we have made

significant strides this year:

• We continue to gather data to better understand the experiences

of colleagues at HL through regular colleague surveys.

• We have introduced a new Service Graduate Scheme alongside

our existing rotational scheme, a range of apprenticeships for

school/college leavers and career changers. We also now offer

12-month industrial placements for undergraduates, internships,

and work experience.

• This year we launched a series of Executive Committee Listening

Sessions so they could get deeper insight into our colleagues’

lived experiences and the different colleague groups at HL. To

date we have held sessions with senior women, ethnic minority

colleagues, women on helpdesk and women in digital, with

further sessions planned for other colleague groups this year.

• Raising the profile of our award-winning colleague networks

in driving engagement and awareness.

We will continue to report back in next year’s Directors’

Remuneration Report on the further progress we have made

during the year.

Contents of this report.

On the following pages we set out:

• A summary of the Directors’ Remuneration Policy which

was approved at the 2020 AGM on 8 October 2020; and

• The annual report on remuneration will be subject to an

advisory vote at the 2022 AGM.

I look forward to meeting with our major shareholders over

the coming months. In the meantime, I would like to recommend

this remuneration report for approval at the upcoming Annual

General Meeting.

Moni Mannings

Chair of the Remuneration Committee

4 August 2022

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Report and Financial Statements 2022

Governance

DIRECTORS’ REMUNERATION POLICY (SUMMARY)

The Directors’ Remuneration Policy was subject to a binding vote and approved by shareholders

at our 2020 AGM held on 8 October 2020. It is intended that it should apply for three years,

until our 2023 AGM.

The full Directors’ Remuneration Policy can be found on pages 78 to 85 of the 2020 Report and

Financial Statements, which is available to view on our website at www.hl.co.uk/investor-relations.

The tables below summarise the key elements of pay for Executive and Non-Executive Directors.

The Company’s Directors’ Remuneration Policy (‘the Policy’) is designed to ensure that remuneration

supports the Company’s strategic objectives, is appropriately positioned against the external market,

and provides fair rewards that will attract, retain, and motivate individuals of the highest calibre

required to run a group of the scale and complexity of Hargreaves Lansdown.

The policy is divided into separate sections for Executive and Non-Executive Directors.

Executive Directors

Component/purpose

and link to strategy Operation and performance measures Maximum opportunity

Base salary

Reflects the individual’s

responsibilities, experience

and contribution.

Supports the recruitment

and retention of the calibre

of individuals required to

lead the Company.

Base salaries are reviewed annually, with any increase usually effective from 1 July.

Base salaries are set taking into account a range of factors including external remuneration levels and

remuneration levels within the Group, as well as an individual’s responsibilities, experience and contribution.

Base salary will ordinarily increase by no more than the average of relevant employee increases. Any increase

beyond this would only be made in exceptional circumstances, which would be explained by the Remuneration

Committee. Circumstances in which the Committee may award increases outside this range may include:

• A change in the scope and/or size of the Executive Director’s role and/or responsibilities;

• Performance and/or development in role of the Executive Director; and

• A material change in the Group’s size, composition and/or complexity.

No absolute maximum increase.

Benefits

An ‘across the board’

benefits package is

available both to employees

and Directors alike.

Supports the recruitment

and retention of the calibre

of individuals required to

lead the Company.

The Committee’s policy is to provide Executive Directors with competitive levels of benefits, taking into

consideration the benefits provided to all eligible employees and the external market.

Where costs are necessarily incurred in the performance of duties on behalf of the Company, those costs

will be reimbursed in full, e.g. travel, accommodation, subsistence, relocation, and any tax and social

costs arising.

Provision of tax efficient benefits such as additional holiday, childcare vouchers and workplace parking

is available through a salary sacrifice mechanism.

Other benefits include (but are not limited to) Group life insurance and Group income protection,

as well as participation in the Save As You Earn scheme.

Whilst no absolute maximum level of benefits has been set,

the level of benefits provided is determined taking into

account individual circumstances, overall costs to the

business and market practice.

In approving the benefits paid, the Committee will ensure

that they do not exceed a level which is, in the Committee’s

opinion, appropriate given the Executive Director’s

particular circumstances.

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DIRECTORS’ REMUNERATION POLICY (SUMMARY)

CONTINUED

Component/purpose

and link to strategy Operation and performance measures Maximum opportunity

Pension

Provides adequate pension

saving arrangements for

Directors and employees.

Supports the recruitment

and retention of the calibre

of individuals required to

lead the Company.

Pension provision is provided in line with the pension provision available for all employees.

Any changes made to the employee arrangements will be carried across to the Directors.

The Committee may amend the form of any Director’s pension arrangements in response to changing pension

legislation or similar developments, so long as any amendment does not increase the cost to the Company of a

Director’s pension provision by any greater percentage than the increase to the provision for all other employees.

The Company will contribute, on the same basis as the pension provision available to all employees to a

savings vehicle where a Director has reached the Lifetime Allowance, would exceed any pension contribution

limits in any year, or has elected to protect their Lifetime Allowance. Alternatively if, in these circumstances,

the Director does not wish to contribute to a savings vehicle, a cash allowance will be paid.

All employees and Directors may waive an element of their Annual Performance Bonus in return

for a corresponding employer’s contribution into their pension.

The Group provides a matched employer contribution of 5%

of base salary.

Where employees make additional contributions of over 5%

of salary, these will be double matched by the Company,

up to a maximum of 11% of salary.

The maximum contribution available to the Directors is 11%

of salary, in line with the wider workforce rate. The maximum

cash alternative is 5%.

Any contribution paid as a result of waiver of the cash

element of an Annual Performance Bonus will not be counted

towards these maxima and will not attract matched funding.

Strategic report Financial statements Other information

Hargreaves Lansdown

Report and Financial Statements 2022

Governance

DIRECTORS’ REMUNERATION POLICY (SUMMARY)

CONTINUED

Component/purpose

and link to strategy Operation and performance measures Maximum opportunity

Annual Performance

Bonus

Rewards achievement of

the Group’s business plan,

key performance indicators

and the personal

contribution of Directors.

Aligns the interests of

Directors with those

of shareholders.

The level of annual performance bonus payable is linked to key financial and non-financial metrics as well as

corporate and individual performance against objectives.

The on-target bonus for each Director as a percentage of base salary will be disclosed in advance in the

annual report on remuneration for each year. The on-target award level for the CEO will be reduced to 50%

of the maximum opportunity over the life of this policy.

For each performance element of the bonus, 25% of the maximum opportunity will be paid for the attainment

of threshold performance.

Performance will be assessed against a combination of financial/growth, non-financial and individual performance

measures with at least a 50% weighting allocated to financial/growth measures, and no more than 20%

allocated to individual performance. In assessing the overall performance outcome, the Remuneration

Committee will use its judgement to consider:

• The extent to which market movements, investor sentiment, interest rates and regulation, all of which are

beyond the control of the Directors, have impacted the performance. This may result in either reductions

or increases in the awards that would otherwise have been granted;

• The extent to which management has operated within the agreed risk parameters; and

• The extent to which the bonus outcome reflects the overall performance of the business, including in the

context of the shareholder experience.

A minimum of 40% of the Annual Performance Bonus is subject to compulsory deferral over three years.

Where required by regulation, deferral will be increased to ensure compliance with regulatory deferral levels

for all variable pay.

Awards will be delivered in an appropriate combination of cash and shares, in line with prevailing regulatory

requirements, with a minimum of 50% delivered through HL plc shares. The combination of cash and shares

will be determined each year by the Committee.

Vesting will occur over a period of three years. Vested shares will be subject to a further retention period

as required under regulation.

Subject to regulatory requirements, dividend alternatives will accrue on deferred awards up to the vesting date

and will be paid as soon as practical after exercise of the award.

Awards are subject to a formal malus mechanism until vesting. Awards are subject to clawback until the later

of three years from the date of award or the end of any post-vesting retention period. Further details of malus

and clawback provisions are set out on page 81 of the 2020 Report and Financial Statements.

The maximum bonus opportunity for Directors

under the current policy is as follows:

• CEO: four times base salary.

• CFO: three and a half times base salary.

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Report and Financial Statements 2022

Governance

DIRECTORS’ REMUNERATION POLICY (SUMMARY)

CONTINUED

Component/purpose

and link to strategy Operation and performance measures Maximum opportunity

Sustained

Performance Plan

Aligns the interests of

Directors with those of

shareholders and rewards

long-term stewardship

of the Company.

Annual awards over HL plc shares will vest over a five-year period, subject to the achievement of underpinning

performance conditions over a period of three financial years beginning from the financial year in which awards

are granted. Vested shares will be subject to a further retention period as required under regulation.

The grant of awards will be subject to satisfactory personal performance of each Director in the period prior

to grant. The underpinning performance conditions applicable for each award will be disclosed up front in the

remuneration report.

Subject to regulatory requirements, dividend alternatives will accrue on unvested awards up to the vesting

date and will be paid as soon as practical after exercise of the award.

Awards are subject to a formal malus mechanism until vesting. Awards are subject to clawback until the end

of any post-vesting retention period. Further details of malus and clawback provisions are set out on page 81

of the 2020 Report and Financial Statements.

The maximum award each year under the Policy is half times

base salary.

Shareholding Guideline

Aligns the interests

of management and

shareholders to the

success of the Group.

All Executive Directors are expected to hold a number of shares in the Company, with a specific market

value expressed as a percentage of their salary, within a reasonable time frame (typically within six years

of appointment).

The current shareholding guideline for Directors is a minimum value of three times base salary.

Vested and unvested (net of tax) awards under the annual performance bonus are included in the calculation

of a Director’s shareholding for this purpose. Unvested awards, no longer subject to performance conditions

(net of tax) under the Sustained Performance Plan are also included.

Reflecting best practice, there is a post-cessation shareholding guideline in place, which applies for two

years following cessation of employment. Upon ceasing to be employed, Directors will be required to retain

a shareholding equal to their shareholding guideline, or the number of shares actually held on departure,

whichever is the lower, for twenty-four months. This will not include shares purchased or awarded to Directors

upon recruitment in respect of any buyout award. Nor will it include shares vested prior to the 2020 AGM.

Not applicable.

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Report and Financial Statements 2022

Governance

DIRECTORS’ REMUNERATION POLICY (SUMMARY)

CONTINUED

Illustration of application of Remuneration Policy

The Committee discloses each year in the Group’s Report

and Financial Statements a bar chart that models the potential

remuneration for each of the Executive Directors for the

forthcoming year using a range of assumptions. The chart

shows the potential value of the current Executive Directors’

remuneration for the forthcoming year for three scenarios;

minimum, mid-point and maximum scenario as follows:

• The minimum amount represents the unconditional

component of the remuneration package: salary, pension

and employee benefits;

• The mid-point amount is the amount the Executive Director

would receive if they achieve an on-target bonus level and

awards under the Sustained Performance Plan vest in full.

It would include both fixed and variable components of

remuneration; and

• The maximum level is the maximum amount of remuneration

each Executive Director can be awarded in the year.

The maximum is subject to remuneration caps that have been

established for each component. Within the scenario charts,

the final scenario on the right hand side sets out the impact

on the SPP award of a 50% appreciation in the Company’s

share price during the relevant period.

Chris Hill – Remuneration opportunity for 2022/23

(£’000s)

4,500

3,000

1,500

Minimum Mid Maximum

SPP

Bonus

Fixed pay

100% 31% 20%

71%

55%

14%

19%

68%

Maximum +

share price

appreciation

Share price appreciation

£817k

£2,642k

£4,102k

£4,284k

Notes

1 Chart for Chris Hill shows that on-target bonus for the 2022/23 performance year will decrease to 200% and maximum bonus opportunity will increase slightly to 400% of applicable salary

for 2022/23.

2 Chart for Amy Stirling shows that on-target and maximum bonus opportunity, based on applicable salary for 2022/23, remain the same for the 2022/23 performance year.

Amy Stirling – Remuneration opportunity for 2022/23

(£’000s)

3,000

2,000

1,000

Minimum Mid Maximum

SPP

Bonus

Fixed pay

100% 33% 22%

68%

10%

52%

15%

21%

65%

Maximum +

share price

appreciation

Share price appreciation

£587k

£1,768k

£2,687k

£2,818k

Strategic report Financial statements Other information

Hargreaves Lansdown

Report and Financial Statements 2022

Governance

DIRECTORS’ REMUNERATION POLICY (SUMMARY)

CONTINUED

Non-Executive Directors

Component/purpose

and link to strategy Operation and performance measures

Base Salary

Supports the attraction and

retention of high performing

individuals, considering both

the market value of the position

and the individual’s skills,

experience and performance.

Non-Executive Directors are paid an annual base fee with fees for additional roles (for example, Senior Independent Director or Chair of a Board Committee and/or Chair

or member of a Group company board).

The Chair’s and Non-Executive Directors’ basic fees are reviewed annually and any increases, if applicable, are normally effective from 1 July.

The fee levels are set taking into account relevant factors, such as time commitment and market data for comparable positions, and taking account of the time

commitment required for the role.

All Non-Executive Directors’ fees including those below are paid in cash on a monthly basis or such other frequency as determined by the Board.

The Non-Executive Directors are not eligible for bonuses, pension or to participate in any Group employee share plan.

Committee Chair fees

Recognises the additional time

commitment and responsibility

involved in chairing a

Committee of the Board.

Each Non-Executive Director receives an additional fee for each Committee for which they are Chair.

The Committee Chair fees reflect the additional time and responsibility in chairing a committee of the Board, including time spent liaising with management and preparing

for a committee of the Board.

Senior Independent

Director (SID) fee

Recognises the additional time

commitment and responsibility

involved in holding the role of

the SID.

The SID receives an additional fee for his or her role.

The fee reflects the additional time and responsibility in fulfilling the role of Senior Independent Director.

Benefits and expenses

To appropriately reimburse

the Chair and Non-Executive

Directors for out-of-pocket

expenses incurred in

the fulfilment of their

responsibilities and any

tax and social costs arising.

Non-Executive Directors may be eligible to receive benefits such as travel and other reasonable expenses.

Where costs are necessarily incurred in the performance of duties on behalf of the Company, those costs will be reimbursed in full, e.g. travel, accommodation,

subsistence, relocation, and any tax and social costs arising.

Expenses may be claimed by the Chair and Non-Executive Directors in line with the Company’s expenses policy.

Appropriate Director insurance and indemnity cover is provided by the Company.

Some Group services are provided at a reduced cost, on the same basis as for all other employees.

Where benefits are provided to Non-Executive Directors, they will be provided at a level considered to be appropriate, taking into account individual circumstances.

In accordance with the Company’s Articles of Association, the maximum aggregate remuneration for

the Non-Executive Directors is £1,500,000 per annum. This limit will be reviewed by the Board from

time to time to ensure that it remains appropriate.

External Board appointments

The Company recognises that external Non-Executive Directorships are beneficial to both the

Director and the Company and that its Executive Directors may be invited to become Non-Executive

Directors of other companies. Such non-executive duties can broaden experience and knowledge

which can benefit the Company. Subject to approval by the Board, Executive Directors are allowed to

accept two non-executive appointments (limited to one in the FTSE 100) and retain the fees received,

provided that the appointment is not likely to lead to conflicts of interest.

Strategic report Financial statements Other information

Hargreaves Lansdown

Report and Financial Statements 2022

Governance

ANNUAL REPORT ON REMUNERATION

This report has been prepared in accordance with the provisions

of the Companies Act 2006 and the Large and Medium-Sized

Companies and Groups Regulations 2013, as amended. It also

meets the requirements of the UK Listing Authority’s Listing Rules

and the Disclosure and Transparency Rules. The Remuneration

Committee confirms throughout the financial year that the

Company has complied with these governance rules and best

practice provisions.

Role of the Remuneration Committee

The Board remains ultimately accountable for executive

remuneration but has delegated this responsibility to the

Remuneration Committee.

The Remuneration Committee is therefore responsible for

determining the Remuneration Policy for the remuneration of

the Executive Directors of the Company and of the subsidiary

companies, the Chair, other members of executive management

and all other employees who are deemed to be Material Risk

Takers. The Committee shall also review workforce remuneration

and related policies, and the alignment of incentives and rewards

with the Group’s culture and defined behaviours, taking these

into account when setting the policy for plc Executive Director

remuneration. The policy is determined with due regard to the

interests of the Company, the shareholders and the Group,

with the objective of being able to attract, retain and motivate

executive management of the quality required to run the Group

successfully without paying more than is necessary.

The performance measurement of the Executive Directors and

key members of senior management and the determination of

their annual remuneration packages is also undertaken by the

Committee. For individuals below the Executive Committee,

there is a sub-committee (the Reward Governance Committee)

for the review of remuneration structures and outcomes consisting

of the Chief Executive Officer, Chief Financial Officer, Chief People

Officer, Group Chief Risk Officer and Group Head of Colleague

Proposition and Capability, which reports and refers decisions

to the Committee for final approval where relevant.

The Committee also ensures that the remuneration relationship

between the Executive Directors and senior employees of the

Group is appropriate and that the Remuneration Policy complies

with the relevant FCA Remuneration Codes. Any exceptional

remuneration arrangements for senior employees are approved

by or advised to the Committee.

UK Corporate Governance Code

When considering the policy, the Committee was mindful of the

UK Corporate Governance Code and believes that the executive

remuneration framework addresses the following principles:

• Clarity – The Committee believes that the remuneration

framework should be clear and transparent. In the Report and

Financial Statements we have enhanced disclosure on variable

pay and the performance measures for the annual bonus have

been simplified, with attached weightings for each measure

being disclosed going forward.

• Simplicity – The remuneration arrangements for Executive

Directors are well understood by both participants and

shareholders. The structure consists of fixed pay, annual bonus

award (including deferral) and the SPP (restricted share award).

• Risk – The remuneration framework has been designed to

mitigate risk where appropriate. The Committee reviews

adherence to the Group’s risk parameters as part of its

determination of variable pay outcomes and malus and clawback

provisions apply to both the annual bonus and SPP award. In the

current policy, these provisions have been enhanced to include

corporate failure.

• Predictability – In the Report and Financial Statements,

the potential value of the Executive Directors’ remuneration

packages at threshold, target and maximum scenarios (plus with

50% share price appreciation) have been provided. In addition,

the Policy also states the maximum annual bonus and SPP

opportunity as a percentage of salary.

• Proportionality – The Committee strongly believes that poor

performance should not be rewarded. The annual bonus requires

performance against stretching measures and the SPP award

has a robust underpin. The underpin measures both financial

and non-financial performance, reflecting the Group’s

strategic priorities.

• Alignment to culture – The remuneration framework has been

designed to support both the Group’s culture, purpose and

values. The performance measures and underpins of the variable

pay awards have been chosen to drive desired behaviours the

HL Way and are aligned to the strategy of the business.

Strategic report Financial statements Other information

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Report and Financial Statements 2022

Governance

ANNUAL REPORT ON REMUNERATION

CONTINUED

Meetings during the year

There were six scheduled meetings during the year and occasional

ad hoc meetings where required. Meetings were chaired by Moni

Mannings; other members were Deanna Oppenheimer and Dan

Olley for the full year and John Troiano for part of year having

joined the Committee on 26 January 2022.

None of the Committee has any personal financial interest

(other than as shareholders), conflicts of interests arising from

cross-directorships or day-to-day involvement in running

the business.

Member Position

Eligible

meetings

Attended

meetings

Moni Mannings Chair •••••• ••••••

Deanna Oppenheimer Non-Executive

Director

•••••• ••••••

Dan Olley Non-Executive

Director

•••••• ••••••

John Troiano Non-Executive

Director

•• ••

During the year the Committee has undertaken activities as set out

below and, in doing so, confirm that there have been no deviations

from the procedure for implementation of the policy in this

financial year:

• Reviewing and implementing the Directors’ Remuneration Policy

and considering our remuneration approach for 2022/23;

• Consideration of the Directors’ Remuneration Report in the 2021

Report and Financial Statements, and the feedback received

from shareholders and proxy agencies;

• Reviewing our approach to business and individual performance

measures, targets and weightings, with a particular focus on

ensuring they evidence delivery against our strategic priorities;

• Receiving and noting regulatory and governance updates

to keep abreast of best practice;

• Considering a formal assessment of risk performance in relation

to remuneration;

• Reviewing and agreeing performance bonuses for the Executive

Directors as well as other Material Risk Takers (MRTs);

• Reviewing and approving Executive Directors’ objectives and

performance measures;

• Reviewing the approach to the new Investment Firm Prudential

Regime (IFPR) and the approach for the identification of, and pay

out process for MRTs under IFPR, Alternative Investment Fund

Managers (AIFMD) and Undertakings for the Collective

Investment in Transferable Securities V (UCITS V);

• Reviewing the remuneration policy for the wider workforce,

including assessing progress towards achieving Director

shareholding requirements, and approving new policies in

accordance with the IFPR requirements;

• Approving the annual Save As You Earn scheme invitation

and terms;

• Receiving reports and overseeing decisions and

recommendations made by the Reward Governance Committee;

• Reviewing and approving the required Remuneration Code

disclosures;

• Reviewing colleague feedback on remuneration, culture and

strategy via the Colleague Forum;

• Reviewing the gender pay gap reporting covering the snapshot

date of 5 April 2021 and noting management’s action plan to

address the gender pay gap; and

• Reviewing and approving an updated Terms of Reference

for this Committee.

The detailed responsibilities of the Committee are set out in its

terms of reference, which are available on the Group’s website

at www.hl.co.uk/about-us/board-of-directors.

Advice to the Committee

During the year, the Committee has been supported by the

Company Secretary, Chief People Officer, Group Head of

Colleague Proposition & Capability, Head of Performance and

Reward, and Chief Executive Officer who are invited to attend

Committee meetings to provide further background information

and context to assist the Committee in its duties. The Group

Chief Risk Officer also provides a formal risk assessment to the

Committee at mid-year and at the end of the financial year which

assesses performance of the business against risk appetite,

key risk indicators, and includes an assessment of risk events

and conduct breaches to ensure second line input into proposed

remuneration outcomes. No Director was involved in decisions

regarding the determination of their own remuneration.

Deloitte LLP, a signatory to the Remuneration Consultants Group’s

Code of Conduct were reappointed by the Committee during 2021

and remain engaged for the provision of independent remuneration

advice, and throughout the year the Committee has been advised

by them. The advisers review all committee papers and provide

input on matters directly to the Committee as well as attend

committee meetings. As such, the Remuneration Committee

is satisfied that the advice it has received was objective and

independent. The fees payable to Deloitte for this advice were

based on services provided against a scope of services approved

by the Committee and amounted to £95,965 plus VAT on a time

and material basis. Other services provided to Hargreaves

Lansdown by Deloitte LLP during the year consisted of risk

advisory, tax, financial advisory, consulting and internal audit

services on a co-sourced basis.

Strategic report Financial statements Other information

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Report and Financial Statements 2022

Governance

ANNUAL REPORT ON REMUNERATION

CONTINUED

Consideration of employment conditions elsewhere

in Company

The Committee considered the Company’s remuneration principles

which apply across the Group when determining the Executive

Director Policy outlined above. In particular, the approach taken

to salary increases and that the structure of the annual bonus

aligns closely to the approach generally taken across the wider

workforce, and the same SPP structure is used for all participants

within the plan. This year our pay review has focused more on

increases to colleagues below our senior leadership who need it

most and the average salary to colleagues in this population was

5.88% for colleagues below senior leadership compared to 4.15%

for senior leadership.

Over the year we have continued to practice our ‘Always Listening’

approach to enable us to better consider the voice of our

colleagues when making decisions.

The Committee is regularly updated on the pay and employment

conditions for the wider workforce through reports from the

Reward Governance Committee and this provided context for

its decisions regarding the remuneration policy.

The Committee also considers the wider salary increase,

remuneration arrangements and employment conditions across

the wider employee population when considering Directors’

pay and awards.

Executive Director Remuneration for 2022

Remuneration payable for the 2022 financial year (1 July 2021 to 30 June 2022) (Audited)

The remuneration policy operated as intended in the financial year with remuneration received by Executive Directors in relation

to performance in 2022 set out below:

Single Total Figure Table

Name of Director Year

Gross Basic

Salary

£’000

Other

taxable

benefits

£’000

Annual Bonus

LTIP/SPP

£’000

Employer

Pension

contribution

£’000

Total

£’000

Total Fixed

Remuneration

£’000

Total Variable

Remuneration

£’000

Upfront

cash

£’000

Deferred

£’000

Chris Hill 2022 700 1 578 385 161 77 1,902 778 1,124

2021 648 1 1,175 783 – 71 2,678 720 1,958

Philip Johnson 2022 477 1 170 114 114 49 925 527 398

2021 459 1 785 523 – 50 1,818 510 1,308

Amy Stirling 2022 187 5 143 95 – 7 437 199 238

Notes

1 This includes Medical, PMI and SAYE discount value over the term of the savings contract in respect of Amy Stirling.

2 Sustained Performance Plan (SPP) is our Long Term Incentive Plan (LTIP), which was approved at the 2017 AGM and granted in November 2017. The formulaic outcomes of the 2017 SPP award

has been assessed by the Committee to ensure it was appropriate and the Committee confirmed it will vest in full with no discretion applied. The value has been calculated using the share price

of £8.482 as at 20 July 2022. As the SPP award was granted using a share price of £15.83, none of the SPP value is attributable to share price appreciation. See page 98 for further details of the

assessment of the underpin conditions.

3 This includes employer pension contributions and any pension allowance paid in lieu of pension contributions.

Overview of activities during the financial year 2022

17%

Wider workforce policy

and gender pay

36%

Executive remuneration

and policy

18%

Business performance and

risk assessment review

13%

Other including

management admin

16%

Regulatory

and governance

Consultation with employees

The HL Colleague Forum was set up to create a feedback channel

directly between colleagues and the Board on matters of strategic

importance. Over the year, this included HL’s culture, strategy

and approach to pay and performance measurement, including

Executive remuneration. The Forum discussed proposed changes

to our approach to pay, the embedding of the strategy and ways

to build on our general culture following the results of our biannual

engagement surveys.

Colleagues were generally excited about the direction of the

strategy. However, they also expressed a desire for more granular

detail so they could better understand their part in delivery

against the strategy. At the following forum on the pay approach,

similar themes came through with colleagues expressing a desire

for greater clarity and transparency around objectives and

performance expectations across all levels.

Strategic report Financial statements Other information

Hargreaves Lansdown

Report and Financial Statements 2022

Governance

ANNUAL REPORT ON REMUNERATION

CONTINUED

Other than SAYE options (which are available to Executive Directors on the same basis as all

employees and included in other cash benefits), and the awards made to Chris Hill on joining,

no share options without performance criteria have been granted to Executive Directors since

7 March 2012.

Where eligible, benefits in kind are available to Executive Directors on the same basis as other

employees. For 2022, benefits include Life Insurance, Income Protection, Private Medical Insurance,

Save As You Earn (SAYE) scheme, reduced platform fees for holding assets on the Group’s investment

platform, reduced dealing charges for self and connected persons and access to a range of voluntary

benefits such as Critical Illness cover.

No Executive Director has a prospective entitlement to a defined benefit pension by reference to their

length of qualifying service.

Assessment of annual performance for the 2022 financial year

(1 July 2021 to 30 June 2022)

The value of any bonuses payable to Executive Directors was determined by the Committee based on:

• An assessment of the performance of the Group against financial/growth and client and delivery

measures, including an assessment of risk performance and risk events as detailed below;

• Each individual’s performance against Environment, Social and Governance (ESG) measures,

including progress against the specific objectives set for them as well as an assessment of risk

management and compliance and their behaviours aligned to the Group’s values; and

• The Committee approved the retention of the simplified three key metrics for the 2021/22 award,

with 50% of the award based on financial/growth metrics, 30% based on client and delivery metrics

and 20% against individual objectives. However, given the importance of ESG, the individual

objectives element has been focused on key personal and collective goals in this area for the

relevant financial year. Further details are set out below.

For each Executive Director, the Committee determined their overall bonus, taking all factors into

account and using all relevant information, by reference to the following target and maximum levels,

as disclosed in the 2021 Report and Financial Statements:

On-target bonus opportunity

(% of base salary)

Maximum bonus opportunity

(% of base salary)

Chris Hill 212.5% 375%

Amy Stirling 175% 350%

Philip Johnson 175% 350%

Notes

1 The maximum bonus opportunity for Chris Hill is 375% for the 2021/22 performance year, and will increase to 400% for the 2022/23

performance year.

2 The maximum bonus opportunity for Amy Stirling is 350% of salary. As Amy was appointed to the Board on 21 February 2022,

her bonus has been pro-rated to reflect her time in role during the relevant performance year.

3 The maximum bonus opportunity for Philip Johnson was 350% of salary for the 2021/22 performance year. As Philip stepped down

from the Board on 31 January 2022, his bonus has been pro-rated to reflect his time in role during the relevant performance year.

Group performance has been considered in relation to the following measures:

Performance category Weighting Objective Descriptor Measure

Financial/growth 50% Define and shape the business to

thrive at scale, deliver sustainable

long-term financial results, and evolve

our market-leading client service to

exceed market expectations

Net New Business

Client Numbers

Profit Before Tax

Client and Delivery 30% Client retention

Client Advocacy

Strategic Delivery

Personal

Environment

20%

Reduce our impact on the

environment, evolve our sustainable

and responsible investment

proposition and provide the tools and

information to enable clients to invest

in line with their preferences

Assess and develop

the footprint of HL,

agree with the Board

steps to help clients be

responsible investors

and understand the

footprint of their

investment portfolio

Social Evolve and communicate the strategy,

and proactively manage the

reputation of the Group across

all stakeholders

Reputation/Strategy

Develop a diverse, inclusive and

innovative culture with colleagues

who are engaged, empowered,

work together and live our values

Diversity & Colleague

Engagement

Governance Shape a well governed organisation

that operates within the Board’s

risk appetite

Effective controls

and processes

Note 1 Assessment of performance will take account of both delivery (what) and demonstrations of behaviours aligned to HL’s values (how).

Strategic report Financial statements Other information

Hargreaves Lansdown

Report and Financial Statements 2022

Governance

ANNUAL REPORT ON REMUNERATION

CONTINUED

Further details of performance in each of these areas is set out below:

Financial/Growth

(50% weighting) Threshold Target Stretch Actual Achievement Commentary

Net new business £7.3bn £8.0bn £8.7bn £5.5bn 0% Net new business targets were set at the beginning of the performance year in a different environment

and, in setting them, the Committee recognised this was an ambitious stretch target based on prior year

(£8.7bn). Although this year’s outcome fell short of threshold (and therefore no bonus was attributable to

this metric), the Committee recognised this represented a good level of growth in an environment of low

investor confidence and challenging market conditions, particularly in the second half of the year.

Client numbers 1,779,000 1,824,000 1,869,000 1,737,000 0% Similar to net new business, client growth targets were set at the beginning of the performance year against

an environment of high investor confidence. Despite a very different landscape to that anticipated, this year

has resulted in a further 92,000 net new clients, representing 6% growth in client numbers (although just

below the threshold and therefore no bonus was attributable to this metric).

Profit before tax £272.25m £302.5m £366.0m £269.2m 0% The Committee recognised that PBT at £269.2m was close to threshold of £272.25m as a result of the

strategic spend incurred during the year. As the targets were set at the beginning of the financial year,

before the strategy was set and investment quantified, this spend was not taken into account in the target

setting. However, the Committee determined that, despite this, threshold would not be adjusted and

therefore no bonus would be attributable to this metric.

Overall achievement 0% of 50% weighting

Client, colleague and delivery

(30% weighting) Threshold Target Stretch Actual Achievement Commentary

Client retention 90% 92% 94% 92.1% 52.5% A very strong performance in the context of external factors. The Committee noted the significance of

maintaining strong client retention reflecting our high quality client service and agreed that client retention

is at a high level as we focus on the FY23 strategic initiatives.

Client satisfaction 79% 81% 83.0% 80.7% 46.3% A strong performance supported by a reduction in complaints and an increase in external satisfaction

measures. The Committee noted both the strong performance in client satisfaction and the broader

indicators in support of this outcome.

Strategic delivery 0% 50% 100% 100% 100%1 The Committee noted the success of Capital Markets Day in February and, although market conditions

changed soon afterwards, the executive team have set out a clear and ambitious timeline of strategic

delivery through the integrated plan and execution over the year has been outstanding. In addition, the

Committee noted the excellent delivery of the FY22 priorities, including launch of the HL Growth Fund,

partnering with two new banks in Active Savings, and driving operational resilience improvements in line

with regulatory deadlines.

Overall achievement 19.9% of 30% weighting

Notes

1 As Philip Johnson stepped down as CFO on 31 January 2022, the Remuneration Committee considered strategic delivery against plan up to this date. It was determined that the objective was on track to achieve 75% against plan based on performance during this period,

as opposed to the 100% achieved for the full financial year. Therefore, it was agreed that the overall outcome for the client, colleague and delivery objective should be 17.4% of 30% for Philip Johnson.

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Report and Financial Statements 2022

Governance

ANNUAL REPORT ON REMUNERATION

CONTINUED

The Committee assessed each individual Executive Director’s performance during the financial year, including against their personal objectives, as follows:

Chris Hill

Personal (20% weighting) Threshold Target Stretch Actual Achievement Commentary

Environmental – assess

and develop the footprint

of HL, agree with the

Board steps to help clients

be responsible investors

and understand

the footprint of their

investment portfolio.

Progress towards responsible business,

responsible fund manager and responsible

investment and savings provider.

Strong

progress made

Above

target

Significant progress made towards implementing the ESG strategy across:

1. Responsible Business – Continued progress towards becoming a net zero business through

increasing the efficiency of our building operations and investing in greener transport options

for colleagues.

2. Responsible Fund Manager – Assessed the carbon footprint of our portfolio to progress plans

in FY23 for our net zero commitments and on track to launch ESG integrated building block and

portfolio funds.

3. Responsible Investment and Savings provider – Launch in FY22 of Responsible Investment

Hub and new ESG investment policy, and increased the number of research articles reflecting

consumer interest trends.

Social – reputation

(dashboard)

Amber Amber/Green Green Amber/Green Target Achieved an above target rating on our reputational risk scorecard assessment.

Savings and Resilience Barometer (developed with Oxford Economics and covering managing debt,

protecting your family, building emergency savings, pension provisions and managing broader

investments) has received 19,500 engagements and 27 press mentions.

Significant improvement across all brand metrics, with market-leading gains across the whole

awareness-interest-desire-action brand funnel.

Trustpilot star rating increased from 3.1 (November 2020) to 4.3 (April 2022).

Significant increase in positive sentiment across all our core media targets.

Social – diversity Progress towards 2025 gender

and ethnicity targets.

Strong

progress made

Above

target

Material progress evidenced through improvements in gender diversity and the Gender Pay Gap.

Women in Finance Charter data shows that we have improved representation of women at senior

management level from 30.4% in August 2020 to 31.5% in August 2021. Female representation has

increased to 44% on the Group Executive Committee. Our 2022 colleague survey response to ‘HL

Values and promotes colleague diversity and inclusion’ was 83% favourable (up from 72% in 2021).

In addition, clear progress has been made in addressing broader inclusion and diversity, including

ethnic diversity. Building on meeting the requirements of the Parker review, the Committee noted

(amongst other initiatives) the launch of HL’s largest internship programme, with 10 interns coming

through programmes which specifically focus on Black, Asian and Minority Ethnic students.

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Report and Financial Statements 2022

Governance

ANNUAL REPORT ON REMUNERATION

CONTINUED

Personal (20% weighting) Threshold Target Stretch Actual Achievement Commentary

Social – colleague

engagement

62% 66% 70% 64% Below

target

Colleague engagement fell below target and slightly behind last year’s score (when it peaked) and

sits alongside some strong scores in culture and also manager engagement. Taking account of

significant changes in the colleague population and the management team, where we are on our

transformation journey, alongside cost of living pressures and adapting to new ways of working

post pandemic, the outcome was not unexpected and the Committee noted management plans

to address this.

Governance – effective

controls and processes

Improvement in control environment, processes,

risk management and assurance actions.

Strong

progress made

Below

stretch

Very strong progress across audit actions, significant improvement in controls and risk

effectiveness and positive interaction with our regulator.

Overall assessment

The Committee concluded that the CEO had achieved strong delivery and contribution to performance and strategic direction against a challenging market environment,

guided by vision, talent and a strong set of values. He should also be commended for building a strong Executive team and leading them to shape HL’s transformational

strategy. The outcome reflects weightings on this as well as excellent stewardship of improvement in controls and risk effectiveness and notable progress in gender diversity

statistics, in particular female pipeline. The Committee also noted his visible sponsorship of diversity and inclusion.

Overall achievement: 15% out of 20% weighting

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Report and Financial Statements 2022

Governance

ANNUAL REPORT ON REMUNERATION

CONTINUED

Amy Stirling

Personal (20% weighting) Threshold Target Stretch Actual Achievement Commentary

Environmental – assess

and develop the footprint

of HL, agree with the

Board steps to help clients

be responsible investors

and understand

the footprint of their

investment portfolio.

Progress towards responsible business,

responsible fund manager and responsible

investment and savings provider.

Good

progress made

Above

target

Significant progress made towards implementing the ESG strategy across:

1. Responsible Business – Continued progress towards becoming a net zero business through

increasing the efficiency of our building operations and investing in greener transport options

for colleagues.

2. Responsible Fund Manager – Assessed the carbon footprint of our portfolio to progress plans

in FY23 for our net zero commitments and on track to launch ESG integrated building block and

portfolio funds.

3. Responsible Investment and Savings provider – Launch in FY22 of Responsible Investment

Hub and new ESG investment policy, and increased the number of research articles reflecting

consumer interest trends.

Social – agreement of the

Strategic and Financial

plan and delivery of FY22

plan. Investor outreach

post Capital Markets Day.

Effective management of the strategic plan

and positive engagement with shareholders.

Excellent

progress

and results

Stretch Significant impact in delivery of the FY22 plan, with strong approach to cost control. Outstanding

stewardship of the strategic plan and focus on FY23 priorities with the Executive team. Excellent

outreach and dialogue with investors to articulate the commercial and financial strategy.

Social – diversity Progress towards 2025 gender

and ethnicity targets.

Good

progress made

Above

target

Material progress evidenced through improvements in gender diversity and the gender pay gap.

Women in Finance Charter data shows that we have improved representation of women at senior

management level from 30.4% in August 2020 to 31.5% in August 2021. Female representation has

increased 44% on the Group Executive Committee. Our 2022 colleague survey response to ‘HL

Values and promotes colleague diversity and inclusion’ was 83% favourable (up from 72% in 2021).

In addition, clear progress has been made in addressing broader inclusion and diversity, including

ethnicity diversity. Building on meeting the requirements of the Parker review, the Committee

noted (amongst other initiatives) the launch of HL’s largest internship programme, with 10 interns

coming through programmes which specifically focus on Black, Asian and Minority Ethnic students.

Social – colleague

engagement

62% 66% 70% 64% Below

target

Colleague engagement fell below target and slightly behind last year’s score (when it peaked) and sits

alongside some strong scores in culture and also manager engagement. Taking account of significant

changes in the colleague population and the management team, where we are on our transformation

journey, alongside cost of living pressures and adapting to new ways of working post-pandemic,

the outcome was not unexpected and the Committee noted management plans to address this.

Governance – effective

controls and processes

Improvement in control environment, processes,

risk management and assurance actions.

Strong

progress made

Below

stretch

Very strong progress across audit actions, significant improvement in controls

and risk effectiveness and positive interaction with our regulator.

Overall assessment

The Committee concluded that the CFO has made an outstanding contribution to the business since joining, whilst also showing excellent leadership in engaging with investors

and stakeholders to articulate the commercial and financial plan. The CFO has created a step change in the planning process and demonstrated a strong set of values,

leadership and talent and the outcome also reflects weighting on strong improvements in internal processes and governance in particular.

Overall achievement: 16.5% out of 20% weighting

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Report and Financial Statements 2022

Governance

ANNUAL REPORT ON REMUNERATION

CONTINUED

Philip Johnson

Personal (20% weighting) Threshold Target Stretch Actual Achievement Commentary

Environmental – assess

and develop the footprint

of HL, agree with the

Board steps to help clients

be responsible investors

and understand

the footprint of their

investment portfolio.

Progress towards responsible business,

responsible fund manager and responsible

investment and savings provider.

Good

progress made

Above

target

Significant progress made towards implementing the ESG strategy across:

1. Responsible Business – Continued progress towards becoming a net zero business through

increasing the efficiency of our building operations and investing in greener transport options

for colleagues.

2. Responsible Fund Manager – Assessed the carbon footprint of our portfolio to progress plans

in FY23 for our net zero commitments and on track to launch ESG integrated building block and

portfolio funds.

3. Responsible Investment and Savings provider – Launch in FY22 of Responsible Investment

Hub and new ESG investment policy, and increased the number of research articles reflecting

consumer interest trends.

Social – investor

feedback, impact of

engagement with

shareholders and

evolution of share register

Effective management of the strategic plan

and positive engagement with shareholders.

Acceptable

progress made

Threshold Progress was evidenced prior to the date the CFO stepped down from the Board through

a combination of individual meetings, conferences and other interactions.

Social – diversity Progress towards 2025 gender and

ethnicity targets.