St James’s Place shares slump as investors fret fee structure overhaul

Stocks on St James’s Place fell on Friday morning after reports emerged that the investment manager may be about to overhaul its fee structure.

By midday on Friday, the company’s share price had fallen 15.7% to 690.4p, making it the worst performer on the FTSE 100 by a considerable distance.

Financial Times said the investment group has been in discussions with regulators, who are concerned that the wealth manager is not adequately complying with new rules on consumer obligations.

From July, all firms regulated by the Financial Conduct Authority are required to provide consumers with “timely and clear” information, better customer service and products and services that offer “fair value”.

SJP, Britain’s biggest wealth manager, has been accused by critics of maintaining an unfair fee structure, charging high sums for financial advice and making early withdrawals.

Withdrawal fees for new customers are currently as high as 6 percent and gradually drop to 1 percent over six years.

Just before the user duty rules came into effect, SJP announced a cap on annual management fees for clients who have invested in bonds and pensions for more than a decade.

But according to the FT, that has not sufficiently satisfied regulators, who have asked bosses to justify keeping exit fees on existing customers while scrapping them for new ones.

The FCA is also reported to be considering whether clients are best served by significant upfront costs for advice and that it is difficult not to pay advice fees in the distant future.

However, SJP is concerned that removing exit fees for existing customers could cause significant damage to its balance sheet.

Around 30 per cent of the firm’s assets under management – £47 billion – were subject to exit sanctions by June 2023, the FT estimated.

In a statement to investors, SJP said it was reviewing its fees and billing models to create a “simplified and scalable billing platform over the long term.”

It added that although the valuation has not yet been finalised, the firm is “confident that all options under consideration will deliver value for customers and a strong, secure and sustainable business for all stakeholders”.

SJP said: “We naturally continue to engage with all our key regulators throughout this process.”

SJP’s announcement comes less than two weeks after former Prudential boss Mark Fitzpatrick became its chief executive.

He replaces Andrew Croft, who will step down in December after a three-decade career with the company, including 13 years as CFO and five as CEO.