St James’s Place will remove the exit charges from several of its key products going forward, following pressure from the regulators and the new consumer duty initiative.
St James’s Place removes exit fees
Wealth manager St James’s Place or SJP as it is often referred to, has announced an overhaul of its fee structure, including the removal of exit fees from new investment bonds and pensions purchased from the firm.
The move brings these products in line with SJP’s unit trust and ISA business.
The wealth manager has also said that it will improve the transparency around its fee structure by unbundling its charges and making them easier to understand.
However, these unbundled fees won’t come into effect until the second half of 2025.
Exit fees under pressure
The firm had reportedly been under pressure to amend its charging structure which has been criticised by others in the wealth management for being excessively expensive and opaque.
Last week the FT ran a story suggesting that SJP was facing calls from the FCA to shake up its fees, in order to ensure that they complied with new rules on consumer duty, which became effective at the end of July.
SJP’s stock fell sharply in the wake of that report, plunging by as much as -20.0% at one point. The news today confirms that the wealth manager has had to adjust its charging structure.
On the face of it, this should be good news for St James’s Place customers and in particular those who are buying new products from the firm.
However, the same can’t be said for shareholders in the business which now faces an estimated hit to its profitability of between £140.0 and £160.0 million, over the next two years.
SJP shares have fallen by almost -40.0% year-to-date.
Andrew Croft SJP’s outgoing CEO 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”
Changes in the way that it charged fees were long overdue at St James’s Place, and the writing was probably on the wall as soon as the FCA moved to bring the consumer duty regulations into effect.
The FCA published its final rules and guidance over a year ago, in July 2022, so the wealth manager has had a minimum of 14 months to amend its business model and yet this all feels somewhat last minute and begrudged.