Criticisms of fee restructures from St James’s Place (SJP), announced yesterday (17 October), have been rebuffed by the wealth management giant as “absolutely incorrect” with the firm also justifying the two-year lead time on proposals.
SJP’s plans for the transition include scrapping early withdrawal charges and gestation periods for “a vast majority” of its new investment bonds and pensions. The firm said it will maintain initial and ongoing charges, with the new structure will reflecting the unit trust and ISA portions of the business.
Mark Polson, principal of the Lang Cat, called the fee change “whiplash” for consumers, bashing the effect the policy will have on existing investors.
“At first glance it looks like good news for clients – until you read that it won’t come into effect until H2 2025, and won’t come in for existing clients at all,” Polson said.
“This is bizarre and seems to me to be against both the letter and spirit of the new Consumer Duty rules – if something isn’t right it should be fixed for both new and existing clients, and as quickly as possible. That doesn’t sound like two years and new-customers-only to me.”
However, a spokesperson for SJP told Portfolio Adviser: “It is absolutely incorrect to suggest the new charging structure will only apply to new clients from 2025. All clients will switch to the new charging structure as soon as it comes into effect.
“For bond and pension products, existing clients who are still within their Early Withdrawal Charge (EWC) periods will transition to the new pricing and proposition once their EWC period has ended.”
SJP also clarified that the reason for the change not taking place until 2025 was a need to switch over system and processing programmes to implement the transition.
Ben Yearsley, investment director at Fairview Investing, said: “Surely it would have been far easier to apply the new charges immediately for everyone. However, I accept there might be system changes that need to take place in advance.”
Polson also commented that the changes at SJP were a direct result of Consumer Duty regulation, which the FCA put into effect at the end of July to increase fair value for consumers.
“This is very much Consumer Duty in action, and SJP reacting to the recently introduced rules,” Polson said. “Whiplash is never pleasant, and their reverse on exit fees will certainly have caused some.”
Boring Money CEO Holly Mackay added that an analysis of SJP’s fee structure would usually show they were not more expensive than alternatives over a long time frame, but the way the fees were structured did act as a source of confusion.
“While the identification of charges at product, platform and advice level may appease the regulator, the truth is that for most customers transparency is not the same as clarity and so the art will be aggregated disclosure for most, and granular disclosure for those who want to dig,” Mackay said.
SJP also acknowledged the consumer’s desire for simplicity when evaluating services.
“We’ve always believed in the strength of our value proposition for clients, and this has been reflected in high advocacy, retention and new business growth,” an SJP spokesperson said.
“However, consumers and regulators are increasingly seeking simple comparability across retail financial services.”
