St James’s Place put in its place by investors as action on fee conduct bites

Published

2 years ago

February 28, 2024

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How many pairs of cufflinks could £1bn buy?

That was the question being asked by City wags after that sum of money was wiped from the stock market value of St James’s Place (SJP) this morning.

It was a knowing reference to the most famous of the gifts with which the UK’s biggest wealth manager used to reward its most successful advisers that came to light in a Sunday Times expose back in 2017.

The paper revealed that SJP’s best-performing advisers were benefiting from what the paper referred to as a “cruises-and-cufflinks bonus scheme” – with a key perk being cufflinks, in the shape of SJP’s old winged lion logo, coming in colours going from blue to green to gold depending on how far in the business an individual got.

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An anonymous adviser told the paper: “It’s a real status symbol among advisers and something we all prided ourselves on. Principal partners can get 18-carat white gold, diamond-encrusted cufflinks worth about £1,200.”

The rewards were among lavish accoutrements that the best SJP advisers could expect if they hit their targets.

There were lavish cruises and holidays to luxury destinations and the famous conferences, at venues like the Royal Albert Hall, where TV presenters such as Fiona Bruce or Jonathan Ross would introduce guest speakers like David Beckham or Bill Clinton.

It all came to an end when the former chief executive Andrew Croft, realising the damage the revelations had done to the company’s reputation, pulled the plug on the scheme in 2019.

Insisting that they had not led to the mis-selling of financial products, he told The Times: “It’s a bit more than an irritation. It’s a frustration. It’s not reflecting the company we are.”

And yet today’s gags – after shares of SJP fell by as much as 32% at one point to reach a level last seen in January 2013 – show how hard it can be to shift impressions.

That is why an even greater reset was called for. It has fallen to Mark FitzPatrick, a former interim chief executive and chief financial officer of the insurance giant Prudential, who succeeded Mr Croft at the beginning of October last year.

Central to changing those impressions and assumptions was a decision Mr FitzPatrick took just three weeks later.

He announced that the company, which manages £168.2bn on behalf of 958,000 clients, would be changing its charging structure – and reducing its fees and controversial exit charges for clients leaving the business early.

As Mr FitzPatrick put it today: “[Our] charging has too often been seen as complex and therefore open for external commentators to challenge.”

He said that, ultimately, the changes would be good for the health of the business.

Yet that simplification of fees means SJP’s profits growth will be impacted in years to come and, in turn, reduce the amount it has available to invest.

The main factor behind today’s stock price meltdown, though, was a one-off provision made by the company of £426m to compensate clients whose service has fallen short of what they might have been entitled to.

Mr FitzPatrick said: “Throughout late 2023 and early 2024 we saw a significant increase in the number of complaints, largely related to whether clients had received ongoing servicing historically. Given the scale of complaints, we needed to explore the issue by assessing client experience.

“The crux of the matter is that…in some instances the frequency of services being delivered was below what clients should have received. This means that we may need provide refunds for clients where we cannot find evidence that ongoing servicing has been provided.”

He said this was “clearly disappointing” but insisted: “We are dealing decisively with these two historic challenges.”

The matter is expected to take between two to three years to resolve and Mr Fitzpatrick said that the company was engaging “extensively” with the Financial Conduct Authority – an increasingly stern critic of opaque charging structures – on the matter.

He added: “We’ve been in extensive conversations with the FCA, we’ve had a skilled person appointed to look at elements of our book and servicing…they’ve undertaken a review of the elements of our book.

“We’ve taken the FCA through this…as is normal for this type of process.

“This has been done with their full awareness and understanding.”

He said records would need to show that an adviser had held a meeting with a client and taken notes on the meeting as evidence that the client had received the service to which they were entitled.

Mr FitzPatrick added: “If you can’t evidence it was done – it wasn’t done.”

He said that since SJP had implemented a new customer relationship management system from Salesforce, in 2021, it had a lot more evidence.

He added: “The size and scale of the issue for 2023 was that 2% of our clients had not been serviced or we didn’t have evidence of servicing. We have written out to those effected clients already…and they will be refunded over the course of this year.”

The investigation dates back to 2018 – when the statute of limitations runs for when this kind of evidence needs to have been retained. The provision meant St James’s Place reported a pre-tax loss of £4.5million for 2023 – down from a profit of £503.9m in 2022.

While the share price reaction is not altogether unexpected, a cynic might say that today’s results statement is a good example what is known in the City as a ‘kitchen sink job’ – where a company issues a set of results or a trading statement containing as much bad news as it is possible to incorporate.

In theory, it should create a base for the share price, potentially making life easier for Mr FitzPatrick in future as he seeks to prove how he is turning around the business.

So where does the company go from here?

Mr FitzPatrick insisted today he was optimistic for the future given how millions of Britons have to provide for their future and have a need for financial advice.

And he was able to point to a quite startling statistic – which is that retention rates at St James’s Place, whose client numbers have more than doubled over the last 10 years, stood at 93.5% last year.

That points to a quite remarkable level of loyalty among SJP clients in spite of the constant drip-drip of awful publicity for the company over the last seven years or so.

He also pointed out that SJP had more branches across the UK than the country’s five biggest banks. That in theory should make it easier to attract new customers.

Investors will worry about whether other nasty surprises may be waiting to come out.

But Mr FitzPatrick said: “I’ve been in the role 12 weeks. I’ve spent a long time listening, learning, looking at things – I can’t see any other significant potholes ahead of us. I’m confident with this issue being acknowledged and that we’re dealing with this – all of this puts us in a place where we can look forward with confidence. This is a historic issue as against a current issue.”

Time will tell. Mr FitzPatrick deserves credit for taking bold and decisive action. It is hard, though, to avoid the conclusion that, just three months into the job, he has already made a pledge on which he will be judged for as long as he is in it.

Business

Good weather and Women’s Euros helps UK net surprise boost to retail sales

Published

2 days ago

September 5, 2025

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Good weather and Women's Euros helps UK net surprise boost to retail sales

Retail sales rose a surprising amount in July, as good weather and the Women’s Euros led people to part with their cash, official figures show.

The amount of spending rose 0.6% in July, according to figures from the Office for National Statistics (ONS), far above the 0.2% rise anticipated by economists polled by Reuters.

In particular, clothing and footwear stores, as well as online shopping, experienced strong growth.

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When looked at on a three-month basis, the numbers are weaker, with a 0.6% fall in sales up to July due in part to downward revisions in June.

Spending has declined since March, when supermarkets, sports shops, and household goods saw strong sales at the beginning of the year as warm and sunny weather pushed summer purchases earlier. Though compared to a year ago, sales are up 1.1%.

Retail sales figures are significant as they measure household consumption, the largest expenditure in the UK economy.

Growing retail sales can mean economic growth, which the government has repeatedly said is its top priority.

A problem with the figures

These figures were originally due to be published in August but were delayed by two weeks so the ONS could carry out “quality assurance” checks.

Following the checks, the statistics body found a “problem”, which meant it had to correct seasonally adjusted figures.

It hasn’t been the only question mark over the reliability of ONS figures.

In March, UK trade figures were delayed due to errors from 2023, and the office continues to advise caution in interpreting changes in the monthly unemployment rate due to concerns over data reliability.

As a result of the latest error, previously monthly figures overstated the monthly volatility in the first five months of 2025, the ONS’s director general of economic statistics, James Benford, said.

Mr Benford apologised for the release delay and for the errors.

What could it mean?

It could mean retrospective changes to the UK economic growth rate, according to Rob Wood, the chief UK economist at Pantheon Macroeconomics.

April’s economic growth rate will be revised down, and May’s will be moved up as a result, Mr Wood said.

There will be no impact on the Bank of England’s interest rate decision, he added.

Business

More than a quarter of cars sold in August were electric vehicles – SMMT figures

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2 days ago

September 4, 2025

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More than a quarter of cars sold in August were electric vehicles - SMMT figures

A greater proportion of electric cars were sold last month than at any point this year, industry data shows.

More than a quarter (26.5%) of cars sold in August were electric vehicles (EVs), according to figures from motor lobby group the Society for Motor Manufacturers and Traders (SMMT).

It’s the largest amount of sales since December 2024 and comes as the government introduced financial incentives to help drivers make the move to zero tailpipe emission cars.

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The full suite of grants were not available during the month, however, with a further 35 models eligible for £1,500 off early in September.

Throughout August more models became eligible for price reductions, meaning more consumers could be tempted to purchase an EV in September.

The increased percentage of EV sales came despite an overall 2% drop in buying, compared to a year earlier, in what is typically the quietest month for car purchases.

What are the rules?

The numbers suggest the car industry could be on course to meet the government’s zero-emission vehicle (ZEV) mandate, the thinktank Energy & Climate Intelligence Unit (ECIU) has said.

It stipulates that new petrol and diesel cars may not be sold from 2030.

Amid pressure from industry, the government altered the mandate in April to allow for hybrid vehicles, which are powered by both fuel and a battery, to be sold until 2035.

Sales of new petrol and diesel vans are also permitted until 2035.

Until then, 28% of cars sold must be electric this year, with the share rising to 33% in 2026, 38% in 2027 and 66% in 2029, the final year before the new combustion engine ban.

Manufacturers face fines for not meeting the targets.

Last year, the objective of making 22% of all car sales purely EVs was surpassed, with EVs comprising 24.3% of the total sold in 2024.

Why?

The increased portion of EV sales can be attributed to increased model choice and discounting, on top of the government reductions, the SMMT said.

Savings from running an electric car are also enticing motorists, the ECIU said. “Demand for used EVs is already surging because they can offer £1,600 a year in savings in owning and running costs.”

“This matters for regular families as the pipeline of second-hand EVs is dependent on new car sales, which hit the used market after around three to four years.

Business

Firms cut jobs at fastest pace since 2021, Bank of England data shows

Published

2 days ago

September 4, 2025

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Firms cut jobs at fastest pace since 2021, Bank of England data shows

Businesses have cut jobs at the fastest pace in almost four years, according to a closely-watched Bank of England survey which also paints a worrying picture for employment and wage growth ahead.

Its Decision Maker Panel (DMP) data, taken from chief financial officers across 2,000 companies, showed employment levels over the three months to August were 0.5% lower than in the same period a year earlier.

It amounted to the worst decline since autumn 2021 as firms grappled with the implementation of budget measures in the spring that raised their national insurance contributions and minimum wage levels, along with business rates for many.

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The start of April also witnessed the escalation in Donald Trump’s global trade war which further damaged sentiment, especially among exporters to the United States.

The survey showed no improvement in hiring intentions in the tough economy, with companies expecting to reduce employment levels by 0.5% over the coming year.

That was the weakest outlook projection since October 2020.

At the same time, the panel also showed that participants planned to raise their own prices by 3.8% over the next 12 months. That is in line with the current rate of inflation.

The news on wages was no better as the central forecast was for an average rise of 3.6% – down from the 4.6% seen over the past 12 months.

If borne out, it would mean private sector wages rising below the rate of inflation – erasing household and business spending power.

The Bank of England has been relying on data such as the DMP amid a lack of confidence in official employment figures produced by the Office for National Statistics due to low response rates.

Bank governor Andrew Bailey told a committee of MPs on Wednesday that he was now less sure over the pace of interest rate cuts ahead owing to stubborn inflation in the economy.

The consumer prices index measure is expected to peak at 4% next month – double the Bank’s target rate – from the current level.

Higher interest rates only add to company costs and make them less likely to borrow for investment purposes.

At the same time, employers are fearful that the coming budget, set for late November, may contain no relief.

Sky News revealed on Thursday how the head of the banking sector’s main lobby group had written to the chancellor to warn that any additional levy on bank profits, as suggested by a think-tank last week, would only damage her search for growth.

Rachel Reeves is believed to be facing a black hole in the public finances amounting to £20bn-£40bn.

Tax rises are believed to be inevitable, given her commitment to fiscal rules concerning borrowing by the end of the parliament.

Heightened costs associated with servicing such debts following recent bond sell-offs across Western economies have made more borrowing even less palatable.

Ms Reeves is expected to raise some form of wealth tax, while other speculation has included a shake-up of council tax.

She has consistently committed not to target working people but the Bank of England data, and official ONS figures, would suggest that businesses have responded to 2024 budget measures by cutting jobs since April, with hospitality and retail among the worst hit.

Commenting on the data, Rob Wood, chief UK economist at Pantheon Macroeconomics, said: “The DMP survey shows stubborn wage and price pressures despite falling employment, continuing to suggest that structural economic changes and supply weakness are keeping inflation high.

“The MPC [monetary policy committee of the Bank of England] will have to be cautious, so we remain comfortable assuming no more rate cuts this year.”

“That said, the increasing signs of labour market weakness suggest dovish risks,” he concluded.