St James’s Place shares plunge as investors worry over fee structure review
- St James’s Place shares were the worst performer of the FTSE 100 index on Friday
- All firms supervised by the FCA must comply with new consumer rights regulations.
St James’s Place Actions fell on Friday morning after reports emerged that the investment manager could be about to revamp its fee structure.
By midday on Friday, the company’s share price had fallen 15.7 per cent to 690.4p, making it the worst performer on the FTSE 100 index by far.
The Financial Times said The investment group was in talks with regulators, who are concerned that the wealth manager is not properly complying with new consumer rights rules.
Drop: Shares in St James’s Place plunged on Friday morning after reports emerged that the investment manager could be close to revamping its fee structure.
Since July, all companies overseen by the Financial Conduct Authority must 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 operating an unfair fee structure, charging high amounts for financial advice and making early withdrawals.
Currently, withdrawal fees for new customers rise to 6 percent and gradually fall to 1 percent over six years.
Just before the consumer rights rules came into force, the SJP declared a cap on annual management fees for clients who had invested in bonds and pensions for more than a decade.
But, according to the Financial Times, this has not sufficiently satisfied regulators, who have asked business owners to justify maintaining exit fees for current customers and eliminating them for new ones.
In addition, it reported that the FCA was considering whether clients would be better served with significant upfront advisory costs and was finding it difficult not to pay advisory fees in the distant future.
However, SJP is concerned that abolishing exit fees for existing customers could cause substantial damage to its balance sheet.
About 30 percent of the company’s assets under management (£47 billion) had been subject to exit sanctions by June 2023, the Financial Times estimated.
In a statement to investors, SJP said it was reviewing its rates and charging models to create “a simple and scalable charging platform for the long term.”
He added that, although the evaluation has not yet been completed, the company is “confident that all options considered will ensure value for customers and a strong, secure and sustainable business for all stakeholders.”
SJP said: “Naturally, we continue to engage with all of our key regulators during this process.”
SJP’s announcement comes less than a fortnight after former Prudential boss Mark FitzPatrick became its designated chief executive.
He will replace Andrew Croft, who will step down in December after a three-decade career at the company, including 13 years as finance chief and five as chief executive.