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Clients seeking compensation from asset manager St James’s Place (SJP) could face skyrocketing legal fees that could cost them thousands of pounds.
AMK Legal, which represents approximately 19,000 SJP clients, receives a 40 percent discount on the reimbursement of successful cases in addition to VAT, according to the website.
As a result, compensated clients will pay almost half – 48 percent – to the law firm and tax authorities.
An example on AMK’s website is of a customer receiving compensation of £10,000 who would receive £5,200 after fees and taxes.
The levy exceeds the 30 percent rate cap imposed on claims management companies in 2022 by the city’s watchdog, the Financial Conduct Authority (FCA).
Payouts: AMK Legal, which represents around 19,000 St James’s Place clients, has said it will claim a 40% cut on compensation received from successful cases on top of VAT
Under the rules, they can charge up to 30 percent on the first £1,499 of compensation, excluding VAT. This then drops to 15 percent on anything over £50,000.
But AMK Legal is not a claims management company and is exempt from the rate cap.
It follows a warning from the FCA last month that SJP customers should avoid using intermediaries to obtain compensation, saying SJP would contact them directly.
SJP, Britain’s largest asset manager, stunned investors last month by setting aside £426 million for potential refunds after customer complaints about inadequate service levels.
Shares fell and are down 31 percent this year.
It then emerged that as many as 100,000 customers could be eligible for refunds for annual assessments they never received.