Refund chaos at St James’s Place: Footsie firm faces £426m payout

Up to 100,000 customers of St James’s Place could be in line for a refund after paying for annual reviews they never received.

The number of potential claims, representing a tenth of clients, is far higher than Britain’s biggest wealth manager has previously indicated.

The FTSE 100 firm recently stunned investors by setting aside £426 million to cover the likely cost of compensating clients for ‘ongoing’ services that its network of financial advisers should have given them.

Poor record-keeping going back to 2018 means St James’s Place does not know how many customers could be affected. But since 2021 it has used a new computer system, giving it more evidence to work out what services clients were provided.

It is the latest turmoil for the firm, which has struggled for years with criticism over its high fees and lack of transparency.

Shares in SJP have continued to slide since it set aside the £426 million. They now trade at £4.25, down more than a third so far this year and a far cry from their £16.83 peak two years ago.

Last year SJP stopped charging 2 per cent of its near 1 million clients where there was a lack of evidence they had received the advice service, implying 20,000 customers had their fees waived. Experts say that figure is likely to be an underestimate.

Philip Rose, of investment firm Halwyn Capital, said the size of the sum earmarked to compensate aggrieved customers suggested the number of people affected ‘will go much higher’.

Customers typically pay 0.5 per cent of their assets managed by SJP for an annual review. It means a client with £250,000 invested would pay £1,250 a year for the service.

The share price slump threatens the wealth manager’s place in the FTSE 100 index of leading shares as it is now worth only £2.4 billion. 

It recently bowed to pressure to offer better deals under new consumer duty rules that oblige financial firms to focus on ‘fair value’ and ‘good outcomes’ for customers.

Controversial early withdrawal charges on all new products will be scrapped in the second half of 2025.

But a Mail on Sunday analysis found that new pension fund customers would soon pay more – and continue to do so for up to 17 years. Customers also struggle to get to grips with a ‘deferred sales charge’ of 6 per cent of their assets for surrendering a policy.

Many existing clients do not realise that they incur the fee whether they leave early or not.

‘This misunderstanding is massively to SJP’s benefit,’ Rose added.

St James’s Place said it had received expert advice when calculating the size of the estimated write-off. It said fees and charges are clearly disclosed.