St James’s Place has experienced a “marked increase” in clients registering complaints relating to whether they have received ongoing servicing historically.
In its financial report for 2023, published today (28 February), the wealth manager reported a £9.9m post-tax loss, compared with profits of £407.2m in 2022.
Its share price dropped from 621p at close on 27 February to 438.6p this morning, following the announcement of the results.
This puts it on track for its biggest daily drop and shares sinking to their lowest level in 11 years, according to Reuters.
SJP said it has undertaken an initial assessment of client servicing records.
The findings from this indicate the need for the business to take action to refund clients where ongoing service has not been evidenced.
The business has set aside £426m for potential client refunds linked to the historic evidencing and delivery of ongoing servicing.
Earlier this month, the Financial Conduct Authority wrote to 20 of the largest financial-adviser firms requesting information about their delivery of ongoing services to clients.
In the letter, it laid out its concerns that clients continue to be charged after advice has been given.
In its 2023 financial results, SJP reported a post-tax underlying cash result of £392.4m which is 4% down year-on-year.
It said the result reflects growth in average funds under management during the year and tight cost control in line with guidance.
However, this robust underlying financial performance was largely offset by an increased UK corporation tax rate.
Its final cash result for the year of £68.7m (2022: £410.1m) has been “significantly impacted” by its ongoing servicing assessment.
“The action we have taken has led to us increasing our provisions for refunds, which has impacted our 2023 results,” wrote chair Paul Manduca, in the report.
“While this is disappointing, we know for the future that our investment in 2021 in our Salesforce customer relationship management system will enable us to monitor service levels to ensure our clients receive the advice and support they expect.”
The business also reported that it had attracted £15.4bn of new client investments in 2023.
Meanwhile, client retention rates have remained high at 95.3%, contributing to net inflows of £5.1bn.
This new business performance, together with strong investment returns, has seen funds under management close the year at a record £168.2bn, up 13% compared to the beginning of the year.
The business also reported a 3% increase in overall adviser numbers to 4,834.
In October last year, SJP announced it would remove its controversial exit fees as part of an extensive overhaul of its charging structure.
The move appeared to have been prompted by the FCA’s increased focus on fair value for customers as part of its Consumer Duty work.
Cover story: No way out? SJP sees light on exit fees
In its 2023, SJP chief executive Mark Fitzpatrick said that, once its new charging structure is fully embedded, the business anticipates that it will be on an “improving earnings trajectory during 2027 and beyond”.
“The board expects that distributing 50% of the underlying cash result will continue to strike the right balance between investment for growth and returns to shareholders, while seeing shareholder distributions increase over time,” he said.
“The upward trajectory in profits should then provide the board with options to grow the dividend element within the total return.”
Whichever way SJP tries to spin it, having to set aside £426m for potential client refunds (presumably with interest) due to lack of ongoing servicing and reviews is pretty dire. It means, basically, that SJP and its “partners” have between them ripped off their clients to the tune of (up to) £426m whilst the FCA (as it so often does) has stood idly by and directed its resources at other stuff of considerably lesser importance. Shouldn’t a sizeable fine be imposed for such a wanton and systemic breach of this requirement of the RDR?
On its own website, the FCA claims to:-
1. protect consumers from the harm caused by bad conduct in financial services and
2. support a healthy and successful financial system and
3. promote effective competition in the interests of consumers and take action to address concerns.
It’s all just utter codswallop.
And me – well said Julian. It would seem that SJP chickens are coming home to roost. Once this hits the national press there could well be a tsunami of complaints.
Were an authorised intermediary firm to make on its website such fantastic and wholly unlived-up-to claims, the FCA would probably be all over it like a rash.
Well said Julian.
FT reports that they had no proper function for recording client reviews pre 2021. Thats 9 years ignoring FCA regulation and 9 years that FCA regulation has failed investors. Perhaps we should also be due a refund in our FCA fee’s?
SJP simply put two fingers up to the RDR, what should be a Select Committee Investigation is how was SJP was allowed not to follow the RDR rules, It has £650,000,000 of Adviser Debt funded by the ongoing advisers!!! and now this set aside figure for not doing exactly whet the RDR was / is all about. And then the Fine for non compliance!!
I was persuaded to buy a Scandia Life product.
Once bought I did not get advice.
A trusting client pays the price.
That was one of many mistakes I made in ignorance.
Mapp LSE chat
There are firms who do nothing year-in year-out, it’s a fact, but that’s not us and we can evidence it. We do what we say we’ll do, and we pick up clients from SJP, and others like them, as a result. That’s the market working fine without the regulator needing to do anything, helped now by the ambulance chasers, it seems.
We’ve only ever had two FOS claims in 20 years of dealing with 1500 clients. One which we are about to win, and one we won some years back. In that case, the client’s brother-in-law, who was also a financial adviser, had wound him up and told him that he could get compensation from us because we supposedly hadn’t reviewed him. He was pitching for the business himself, obviously. We blew the complaint out of the water with evidence that we’d offered him reviews on 13 separate occasions, all of which he’d ignored, along with ignoring some switch recs from panel driven internal fund and portfolio reviews. The FOS gave us the decision hands down.
Now the ironic bit:
1. This was the client who first drew LCF to my attention. Him, his wife, and her parents, were going to put £15k each into it, £60k in all. They emailed me late one evening and I replied to them early next morning warning them off. Then I warned the FCA about LCF, but they did sweet Fanny Adams, and the rest is history. I saved the clients £60k, but they would not know that until LCF hit the fan a few years later.
2. The brother-in-law who wound up my client was an adviser with … SJP!
The other irony is that in your example of you evidencing that you had contacted the client 13 times which he had ignored, this is no longer acceptable as a reason for continuing to charge OAF in the eyes of the FOS.
If the client has not been seen for 12 months (or a reasonable period thereafter) the OAF has to be switched off regardless of whether any offer of a review has been made or not!
Good IFAs have too many clients and turn down new ones.
Bad IFAs earn while they learn.
Almuth
I’m sorry for being a little slow, but I have difficulty in following your posts. In the first one who was it that sold you a Skandia Life product (now Quilter)? Was it an independent adviser? What was the product? If it was just a one off transaction for life assurance or anything why did you expect on going service.
In your second post how do you conclude that good IFAs have too many clients. They may have sufficient for their capacity, which merely proves that they are good IFAs – not taking on more than the can handle. Or perhaps they are just being diplomatic and turning away clients who they feel don’t fit.
Bad IFAs don’t learn – that’s why they’re bad.
SJP flaunt there £168Billion funds under management yet can’t be get round to put in a system register the delivery of the services that come with it (until 2021 according to the story). They should be doing a lot better than this. This is a terrible story which will have ramifications for all of us, I’m afraid.
I put my thoughts eleswhere today on this FCA disgrace…again.. the majority of time when AB was at helm of the illustrious regulator!!
Howvever, having read and gauged the feelings and comment above here…consider this –
In the financial crash – so called of 2008/9/10 – the number of prosecutions laid at Wall = Zero convictions yet, Main Street – retails ville – saw over 70 imprisoned, orfined on plea bargaining…
SJP falls between the two, but shows that the eradication of ‘too big to fail’ has failed. Maybe this is why Banks and similar big Co.s get fined, whilst individuals and SMEs get fined, and closed down, and have names published, and…
The true FCA test here – naming & shaming upon investigation only – has arrived. The worst bit for SJP fodder, sorry clients, is that none of the advice or over charging statements from SJP even mention regulation or FCA involvement. Will the names list appicable be published by fca or eleswhere – I understand computers these days have huge capacity!!
Two things – i) SJP know there strength and influence vs fca; &. ii) Maybe their clients can relax under the hand of such management confidence/arrogance/Teflon finish… take your pick!!