An
investment
professional
and
activist
shareholder
has
referred
under-fire
wealth
management
firm
St
James’s
Place
(SJP,
STJ)
to
his
own
MP
in
a
bid
to
trigger
an
investigation
by
the
Treasury
Select
Committee
(TSC)
into
its
business
practices,
transparency,
and
Consumer
Duty
responsibilities, Morningstar has
learned.
Philip
Rose
is
the
founding
director
of
investment
firm
Halwyn
Capital.
He
has
been
a
shareholder
in
SJP
since
early
Q4
2023,
but
says
the
position
is
“non-material”.
The
company’s
share
price
does
not
substantially
impact
his
own
finances.
He
says
he
was
struck
by
SJP’s
historical
approach
to
charging
its
pension
clients
and
has
submitted
a
document
bearing
Halwyn’s
corporate
branding
to
his
local
Edinburgh
MP
Joanna
Cherry
in
an
attempt
to
encourage
the
TSC
to
probe
SJP’s
business
practices.
He
has
also
used
his
position
as
a
shareholder
to
highlight
his
concerns
to
SJP’s
investor
relations
team.
Last
year,
SJP
announced
it
would
be
overhauling
its
fee
model
for
new
clients
after
coming
under
pressure
from
the
Financial
Conduct
Authority
(FCA).
It
has
since
announced
plans
for
a
£426
million
provision
for
client
refunds,
a
move
which
sent
its
own
shares
plummeting
last
week.
Rose
first
started
investigating
SJP’s
withdrawal
charges
for
its
pension
clients
in
September
last
year
–
before
SJP’s
work
with
the
regulator
and
subsequent
fee
overhaul
were
made
public,
but
after
Consumer
Duty
rules
came
into
force
in
July.
He
says
he
was
surprised
the
UK’s
largest
wealth
manager
had
continued
to
use
deferred
sales
charges,
which
have
been
long-abandoned
by
the
wider
financial
services
world.
Clients
Don’t
Understand
SJP
Charges
“This
style
of
accounting
for
charges
gets
used
because
it
appears
to
soften
the
blow
from
the
investor’s
perspective,”
Rose
alleges.
“The
investors
do
not
see
a
chunk
of
their
pot
disappear
on
day
one
when
they
invest,
even
though
that
is
what
is
happening.
They
just
smooth
it
through
the
accounting.
“You
often
end
up
with
this
scenario
where
you
have
got
a
product
with
a
deferred
sales
charge
with
an
associated
early
withdrawal
charge
where
clients
think:
‘well
if
I
do
not
come
out,
I
do
not
pay
it.
That
is
universally
misunderstood.'”
Rose
believes
that,
if
SJP
had
pursued
a
policy
of
waiving
the
early
withdrawal
charge
and
clients
subsequently
left
within
six
years,
it
would
force SJP
to
refund
the
commission
already
charged
and
paid
away,
resulting
in
a
cash
hit
for
the
company.
Instead,
clients
are
left
with
a
system
they
find
hard
to
understand.
“Clients
do
not
understand
it,
the
company’s
own
insitutional
investors
struggle
with
it.
Even
I
am
digging
through
all
the
paperwork,”
he
says.
“With
all
my
years
of
experience,
it
took
me
a
while
to
get
to
the
bottom
of
exactly
how
they
were
charging
it.
An
ordinary
consumer,
frankly,
has
zero
chance
of
understanding
how
the
charges
work
on
the
pension
side.”
In
his
view
this
may
contravene
four
of
the
FCA’s
12
Principles,
which
all
financial
services
firms
within
its
regulatory
perimeter
must
observe
(see
below):
integrity,
customer’s
interests,
communications
with
clients,
and
the
recently-implemented
Consumer
Duty,
which
demands
relevant
firms
must
deliver
“good
outcomes”
for
retail
financial
customers.
In
subsequent
communication
with
Cherry
seen
by
Morningstar,
Rose
writes
the
business’s
pension
plans
may
have
been
misleading
because
clients
may
have
made
decisions
based
on
a
misunderstanding
of
the
information
presented
to
them.
There
is
also
the
possibility
that,
if
SJP’s
pension
clients
universally
realised
there
was
not
an
explicit
extra
charge
for
them
to
leave,
then
the
company’s
impressive
client
retention
rates
might
falter,
he
adds.
“The
overwhelming
majority
of
[SJP’s]
investment
products
do
not
offer
value
to
customers,
by
their
own
assessment,”
the
document
reads.
“They
have
relatively
high
charges
and,
in
relation
to
their
pension
products,
they
are
opaque
and
misleading
in
their
presentation
by
the
company,
particularly
with
regard
to
point-of-sale
commissions.”
He
adds
he
has
also
sent
an
“in-depth
report”
on
SJP
to
the
FCA,
the
Treasury
itself,
and
the
TSC’s
own
clerks,
who
“triage”
submissions
to
it.
Pension
Clients
Are
Central
Although
this
particular
example
of
charging
only
relates
to
SJP’s
pension
business,
Rose
argues
the
issue
is
hugely
significant
because
the
business’s
pension
clients
are
a
driver
of
its
revenues.
“Back
in
October,
SJP
announced
some
changes
to
its
pricing
structures.
One
of
the
things
that
is
happening
after
these
changes
is,
for
new
pension
clients,
it
is
moving
away
from
deferred
sales
charges
to
a
simple
upfront
sales
charge,”
he
says.
“They
are
moving
in
the
right
direction,
but
that
does
not
improve
things
for
the
existing
client
bank.
The
reason
any
financial
organisation
has
ever
used
this
type
of
sales
charge
in
the
past
is
because
simply
it
doesn’t
look
as
bad
to
the
client.
That’s
the
whole
reason
the
industry
invented
it
in
the
first
place.”
Over
the
last
12
months,
shares
in
SJP
have
fallen
66%.
The
company
has
swung
to
an
annual
attributable
pre-tax
loss
of
£4.5
million
for
2023,
compared
to
a
£503.9
million
profit
in
2022.
That
said,
total
funds
under
management
have
jumped
13%
to
£168.2
billion
at
the
end
of
2023
from
£148.4
billion.
On
the
back
of
the
results,
SJP
declared
a
final
dividend
of
8p,
cut
from
37.19p.
This
lowered
its
full-year
dividend
to
23.83p
from
52.78p.
A
spokesperson
for
SJP
declined
to
comment.
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