picture of a magnifying glass over the fca logo on the fca website

What is the St. James’s Place FCA investigation looking at?

In late February 2024, St. James’s Place, the UK’s largest wealth manager, announced that it had set aside £426 million to compensate clients who had not received financial advice they had paid for.

This move followed extensive discussions with the Financial Conduct Authority (FCA), which remain ongoing, and other moves by the regulator.

Let’s explore everything you need to know about the FCA’s dealings with St. James’s Place over the last year.

July 2023: St. James’s Place announces fee reduction

While St. James’s Place has long enjoyed a strong reputation as the UK’s leading wealth manager, it was also well-known – some might say notorious – for its expensive fees compared to others in the industry.

In July 2023, the firm announced plans to reduce fees across its services.

This move coincided with the launch of the FCA’s Consumer Duty, which requires financial services providers to prove they’re providing their clients with value for money.

October 2023: Further FCA pressure on St. James’s Place over fees

In addition to being expensive, St. James’s Place has long faced criticism for its complex and non-transparent charging structures. Such criticism was only fuelled by widespread reports of decadent staff reward programs that saw team members earn cruises or be presented with St. James’s Place-branded cufflinks that were said to cost around £1,200 a pair.

While the company changed adviser pay and perks during 2020, the FCA continued to pressure it to overhaul its fee structure, which it agreed to in October 2023, changing its fees days after reports highlighted the extent to which the regulator was getting involved.

The following month, St. James’s Place accepted guidance from the Financial Ombudsman Service to change how it dealt with some complaints.

February 2024: Surprise as St. James’s Place sets aside huge sum

Many were surprised in February 2024 when St. James’s Place said it had set aside £426 million for potential client refunds and compensation claims.

Some industry analysts have said that the £426 million sum might not even amount to half of what is really needed to pay redress to its clients, perhaps fuelled by the firm itself admitting it didn’t know how many clients it would need to compensate.

However, we do know that St. James’s Place complaints overall, not specifically about fees, more than doubled to 8,606 in the second half of 2023. The company has also hired 100 new team members to deal with complaints and expects to take around three years to work through the anticipated volume of claims.

Why are people claiming compensation from St. James’s Place?

As part of its enforcement of Consumer Duty regulations, the FCA has been placing greater regulatory scrutiny on the fees charged by St. James’s Place and other asset managers in the sector.

One concern the regulator has, which is the focus of an ongoing investigation and the reason St. James’s Place has set aside the £426 million, is that clients have been paying ongoing services fees, particularly within the firm’s “all inclusive” package, but have not received the ongoing advice.

This ongoing advice should include an annual review. Where these have not taken place or where there is no record of them, clients may have grounds to claim compensation. It is also known that there were gaps in St. James’s Place’s record-keeping before 2021 when the firm introduced new IT software. This is likely to increase the chances the firm will end up paying significant compensation where there is no evidence that a review took place, even if it did.

Is the FCA only looking at St. James’s Place?

No. In early 2024, the FCA announced that it had written to 20 of the UK’s largest advice firms and wealth managers with concerns about their fee structures and that clients may have been paying for advice they hadn’t received. The regulator requested information about client fees from each of these firms, and what they receive is likely to determine whether further regulatory action is taken – most likely to be fines for companies the regulator deems have not treated or charged its clients fairly.

To date, only St. James’s Place and Quilter are known to have been recipients of the letter. Both firms are also subject to a skilled person review, with the latter confirming it had agreed to this happening when it released its annual results in late April. Quilter is also thought to have set aside a significant sum to pay compensation claims but has not confirmed the figure.

While the FCA has written to 20 of the UK’s leading wealth managers, this issue will likely extend across the market. As such, if you’re a client of a smaller wealth manager rather than one of the “big boys,” you may still have been paying for advice you haven’t received.

How much compensation could I get?

If St. James’s Place or another wealth manager or financial adviser has been charging you for advice you haven’t received, your potential compensation award will depend on several factors, including:

  • The fees you pay – St. James’s Place clients typically pay an ongoing fee of 0.5% of all assets under management.
  • How long you’ve been a client of the wealth manager or financial adviser.
  • How many annual reviews you’ve paid for that didn’t take place or weren’t documented.

While each of these will be specific to you, at LawPlus Solicitors, our clients receive average compensation awards of £1,500.

How can I claim compensation from my wealth manager?

The first thing to do is to gather all your paperwork so you know exactly what you’ve been paying for and the services you should have received.

The next step is to ask your financial adviser to provide a record of all the reviews you should have had.

If they cannot provide evidence of your reviews, it’s time to start your claim.

Start your annual management charges claim with LawPlus Solicitors

You can complain to your wealth manager or financial adviser yourself if you wish, without using a law firm or claims management company.

However, if you would like assistance with your claim or aren’t sure if you’re owed compensation, we can help. We’ll conduct a free, no-obligation review of your documentation and let you know if we believe compensation is due.

If so, you can instruct us to bring your annual management charges claim on a no-win, no-fee basis.

Get in touch now to get started.

Image Credit: IB Photography / Shutterstock.com

Get in Touch

Fill in the form below to tell us your details, and we’ll get started.