St James’s Place overhauls fee structure after regulatory pressure

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St James’s Place, the UK’s largest wealth manager, has announced an overhaul of its fee structure following pressure from regulators.

The FTSE 100 group has long faced scrutiny over what critics say are opaque and expensive charges for financial advice and stiff penalties for early withdrawals.

In a statement on Tuesday, SJP said it would create a new charging structure for the majority of new investment bonds and pensions. These will operate without early withdrawal penalties, as is already the case for the wealth manager’s unit trust and ISA business.

About £47bn — or 30 per cent — of SJP’s assets under management were subject to exit penalties as of June this year.

The group said it also planned to improve disclosure on its fees by “unbundling” them into component parts in a move that would separate charges for initial and ongoing advice, investment management and product administration.

SJP currently discloses fees primarily on a so-called all-inclusive basis, making it difficult for its 900,000 clients to know what they are paying for. The changes to its fees will come into effect in the second half of 2025.

The overhaul follows a Financial Times report last week that revealed SJP was coming under pressure from the Financial Conduct Authority to shake-up its fees to ensure it complies with the UK’s new consumer duty.

Shares in SJP tumbled 20 per cent after the report, extending their drop this year to 40 per cent amid growing concern over the fallout for the group’s business model. SJP shares were down 3 per cent in early trading on Tuesday.

Analysts at Jefferies said that the changes would result in a “material reduction” in SJP’s profitability, estimating that their implementation would cost between £140mn and £160mn over two years.

The FCA in July introduced the consumer duty rules that are designed to force companies to show they are acting in customers’ best interests.

“The changes will reduce the underlying cash result over the next few years before growth accelerates over the medium term and beyond,” the group said on Tuesday.

Andrew Croft, the company’s outgoing chief executive, said the changes “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”.

The announcement came as SJP reported results for the three months to September 30, in which it recorded just under £1bn of net inflows, bringing overall assets under management to almost £160bn.