If you are a St. James’s Place (SJP) client, you’ll know that the wealth manager has announced that it will be radically changing its fee structure.
In the largest overhaul of its fees in its 31-year history, on 17 October 2023, SJP said it would:
- Introduce a revised charging structure for new investment bonds and pensions. SJP will remove early withdrawal charges, and instead operate with initial and ongoing charges.
- Separate charges across all its wrappers into component parts (advice charges, fund charges, and product charges).
- Rebalance charges towards advice, with initial product charges removed for all products, and ongoing product charges reduced and tiered for large investments.
The changes are set to come into effect during the second half of 2025.
Speaking about the fee restructuring, Andrew Croft, chief executive officer at SJP, said: “The changes announced today are about positioning our business for continued success by putting in place a future charging structure that reflects the evolution of consumer engagement with retail financial services, and is aligned to the long-term value that we deliver to clients through the partnership.
“We have always been confident that SJP offers its clients real value that helps individuals and families achieve financial wellbeing.”
However, while SJP is claiming that the “rebalancing” has been done to better reflect the value it delivers to its clients, in reality, many financial experts believe that SJP has been forced to make these changes following increased regulatory pressure.
SJP and the new Consumer Duty
The new Consumer Duty is a standard introduced by the Financial Conduct Authority (FCA). It came into force on 31 July 2023. The Duty sets higher and clearer standards of consumer protection across financial services and requires firms to put their customers’ needs first.
On 13 October 2023, SJP’s shares fell by over 20% following media speculation that the firm would be forced to reform its fee model to comply with the Consumer Duty. And as the wealth manager bows to the pressure from regulators, the changes may be too little, too late for some investors.
A history of overcharging at SJP
Over the last few years, SJP has faced increasing scrutiny over alleged unclear and expensive charges for financial advice. It has also come under fire for implementing stiff penalties for early withdrawals. Indeed, during our investigations, we discovered that many SJP clients have been unable to move on due to onerous contract terms involving lock-ins and high exit penalties. For example, SJP uses both an “Early Withdrawal Charge” and “Exit Fees”. So, clients have been forced to pay double to move their investments elsewhere.
While SJP clients have been very loyal, that has changed as more and more evidence about negligent advice, mis-selling, and overcharging came to light.
- SJP’s share price has witnessed a sharp decline in the last two years, losing nearly half of its market value (approximately £3.8 billion). Key funds at SJP showed significant underperformance during this period.
- SJP data for 2022 revealed that 41% of UK clients’ assets under management were in funds that provided inadequate value.
- SJP states that it hires “best in breed” stock-pickers to create bespoke funds that are “only available” to its clients. But, according to The Times, “managers of 13 SJP funds also run less expensive versions of these products — sometimes with almost the same investments — available to all investors”. As such, some clients have paid significantly more to invest with SJP, despite almost identical, but cheaper funds being available elsewhere.
- According to analysis by Morningstar, only one of the SJP-branded funds has achieved higher returns compared with its non-SJP counterparts over five years.
- While SJP makes most of its profits from annual charges (with SJP advisers receiving lavish rewards for hitting sales targets), the company has been forced to cut its inappropriately high fees in light of regulatory changes.
- SJP’s fee model has faced severe media scrutiny, with reports that many clients are paying significant adviser fees for an annual review service that they are simply not receiving.
KP Law has launched a group action to help SJP clients claim compensation for this abuse of trust
KP Law has launched a group action to help affected SJP clients get compensation for this negligence, mis-selling and overcharging. Because group actions can have a bigger impact than a single claim, our approach increases your chances of success when claiming compensation from SJP.
If you have invested with SJP, you could be due thousands of pounds in compensation. You could have a claim even if your current investment appears to have performed well.
Signing up to our group action is straightforward and costs you nothing as we act on a no-win-no-fee basis.
If you are not sure what you can claim for, we can find this out for you.
