SJP scraps exit charges as part of fee structure overhaul

St James’s Place will remove its controversial exit fees as part of an extensive overhaul of its charging structure.

The move appears to have been prompted by the Financial Conduct Authority’s increased focus on fair value for customers as part of its Consumer Duty work.

SJP held firm with its charging structure when the FCA first revealed its proposals.

But having come under increased scrutiny in recent months, the firm has had a change of heart.

The changes follow the announcement of a new chief executive last month and are planned to come into effect during the second half of 2025.

Having completed an internal evaluation of its charging structures, the business said it is “ensuring it continues to have a sustainable and competitive charging platform”.

The changes create a revised charging structure for the vast majority of new investment bonds and pensions.

These will operate with an initial charge and ongoing charges applicable from the outset, and without any early withdrawal charges or gestation period, as is already the case with SJP’s unit trust and ISA business.

In addition, charges across all the firm’s wrappers, which have historically been disclosed primarily on an all-inclusive basis, will be separated into component parts.

These will comprise initial and ongoing advice, investment management, and product administration which will be tiered for larger investments.

Furthermore, SJP is rebalancing its charges so they “better reflect the value clients see across each element of its proposition”.

SJP had come under increasing pressure to change its charging structure, including scrapping exit fees, in recent weeks.

An article in the Financial Times last week said investors’ concerns over its business model have “intensified” since the introduction of the FCA’s Consumer Duty rules in July.

SJP responded to media speculation regarding its fees that morning, insisting the assessment of its fees and charging structure, currently underway, will “ensure value for clients”.

The business said the changes announced this morning have “naturally involved engagement with key regulators”.

SJP claimed that, in addition to benefiting from “improved simplicity and therefore comparability”, clients will see “enhanced value” from the changes it is making, with reduced overall ongoing charges for existing client investments across its core product wrappers.

“Our continued focus on value and outcomes for clients is consistent with the ongoing expectations of Consumer Duty and we are confident that our changes will work well for clients,” the business said in a statement.

“Our charges will continue to compare favourably with competitor rates available in the marketplace, representing good value for the high-quality service that we provide alongside our partners.

“This will support our brand and reputation in the marketplace, which will, in turn, benefit the partnership.”

For shareholders, these changes and the associated implementation costs will affect the shape of the cash result in the future.

The changes will reduce the underlying cash result over the next few years before growth accelerates over the medium term and beyond, aligned with the development of total Group funds under management.

SJP’s outgoing chief executive Andrew Croft said: “The changes announced today 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.

We have always been confident that SJP offers its clients real value that helps individuals and families achieve financial wellbeing. However, it is increasingly evident that consumers are seeking simple comparability, and this has been reflected in regulatory trends too, as highlighted with the Assessment of Value and Consumer Duty regimes. The review of our charging model reflects these developments.

I am confident that SJP’s ability to both deliver and demonstrate value in the future, with this sustainable model of charging for our end-to-end services, is good for clients and represents an exciting opportunity for SJP.”

Last month, SJP appointed Mark FitzPatrick to succeed Andrew Croft as chief executive subject to regulatory approval.

In a statement it said FitzPatrick has been made chief executive officer designate with effect from 1 October 2023.

It is expected he will assume the role of CEO on 1 December 2023 and is a well known figure within the advice sector.