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Which? investigation accuses SJP of misleading charges

Undercover investigation found charges disclosure varied and restricted advice was not clearly explained


An undercover investigation has revealed some advisers from St James’s Place are not disclosing their charges clearly or stating they are restricted.

In an investigation by consumer champion Which?, undercover researchers saw 12 SJP advisers over a two-week period in May. The researchers were seeking independent advice on investing £100,000 and all were offered free introductory meetings.

Which? was interested in what the advisers told the researchers about charges and also how clearly they highlighted they are restricted not independent.

The investigation showed four out of 12 advisers did not describe in detail what their charges were.

The advisers who did give information about charging, gave varying information.

Some said the initial charge was 4.5 per cent, while others said it was 5 per cent. Estimates for annual ongoing charges ranged from 1.25 per cent to 2.3 per cent and only seven of the advisers mentioned ongoing charges.

Which? said the advisers who gave information on charges did so as part of a “sales pitch”, which it said could confuse potential clients about how much they would pay.

According to Which? SJP said some of the advisers might have quoted advice fees, which are 4.5 per cent of the initial investment, while others quoted 5 per cent, which includes other fees.

Which? was told by SJP that the discrepancies in ongoing charges might have been because some advisers quoted the annual management charge, while others quoted an estimate for all charges.

Three of the 12 advisers did not say they were restricted and Which? said some of the advisers who did confirm their status made the distinction between being independent and restricted sound like a “technicality” rather than a fundamental difference.

According to the Which? report, one adviser said he did not need to be independent because SJP is, which it claimed gives the client the impression it “was about the size of the operation not the nature of the service”.

SJP told Which? it does not believe “being restricted is in any way inferior to being independent”. It also said its advisers were trying to explain its “distinct approach to investment management” and that if advisers’ explanations dismissed the value of independent advice it was “regrettable”.

According to the investigation, three of the 12 advisers “grossly exaggerated” the potential returns of a “cautiously managed” SJP portfolio. They highlighted past double-digit performance, when the recommended funds were more likely to achieve 3 per cent to 5 per cent per year.

Which? said when it spoke to SJP about this, it agreed that past performance is not an indicator of future performance but that it stood by its recent figures.

Which? has shared its findings with the FCA.



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There are 16 comments at the moment, we would love to hear your opinion too.

  1. No surprises there then. To be fair as an industry we have a long way to go in terms of disclosing what the charges are and the service that the client can expect to receive.

    In a couple of months I will be moving companies, the client service document that I have seen itemises everything upfront, in monetary terms whatever charging basis is used, and breaks down the costs for different stages of financial planning, ie initial work and ongoing.
    I cannot take it for granted that my clients know what they are being charged, and perhaps this formal approach avoids any awkward conversations in the future.

  2. Julian Stevens 24th July 2017 at 9:58 am

    Given that Which? has shared these findings with the FCA, the crunch question now is: What, if anything, does the FCA intend to do about them? Has Which? asked the FCA to comment?

    Furthermore, in view of the FCA’s recent study into the whole issue of disclosure of costs, the conclusions of which made no mention of SJP, these findings are all the more disconcerting.

  3. No real surprise I regret to say – something needs to be done – especially the very high initial ‘commissions’ involved.

  4. No kidding! And the Earth is round.

  5. Robert Milligan 24th July 2017 at 10:49 am

    SJP are not Restricted they are Tied Agents any other description is inflammatory and misleading they are also completely guilty of Contingent Charging as the AMC of the units advised are used to subsidise the Advice Process last year over £15,000,000!!!

    • Julian Stevens 24th July 2017 at 1:00 pm

      Not quite ~ in certain areas such as protection and annuities they are in fact (almost) WoM.

      I was chatting to a colleague this morning and he reckons SJP agents can, in fact, use any fund on the market. Whether or not there are disincentives for them actually to do so is another matter.

  6. Sounds like a witch hunt to me … (excuse the bad pun)

    No laughing matter, and a bit vindictive from Which ..

    hey, I neither like or dislike SJP as they have a right to run their business anyway they damn well please, and it seems the regulator is happy with them and they are within the rules, thats all that matters they dont need to answer to me, any-one else, or indeed which !

    I do find the whole mystery shopping thing very distasteful, ask those 12 advisers how they feel about having their valuable time wasted in such manner.

    One word may sum this up… entrapment !

    • Julian Stevens 24th July 2017 at 1:58 pm

      The issue here is that SJP doesn’t operate within the rules by which the rest of us are required to abide. Allegedly, SJP’s standard response to any attempts at intervention on the part of the FCA (so I just heard) is to commission its lawyers to write a letter threatening aggressive legal action if the FCA doesn’t back off and stop bothering their client.

      • Well thats not for me, you or “which” to decide who is operating within the rules or not …..SJP, me, you all complete our RMAR’s what the FCA do with this info lord only knows…

        I think I am right in saying the FCA have openly admitted they dont see an issue with SJP’s model…..

        As for letters from SJP lawyers to the FCA, I havnt heard that and couldn’t comment, however,…. we all know the FCA are guilty of picking on, or bullying the low hanging fruit,…. its not right, but money talks if you have enough of it, just look at the mass chaos the big banks have caused…… they the FCA will fine a compliance man £75k but how many guys at the top of the tree have they fined or jailed ? as apposed to those way down on the lower branches ?

        The whole industry is skewed from start to end, favoring the rich & powerful to the down right criminal, the likes of you and me left to suck on it…..

        IMHO Which; like many others are stirring the …. over charges and disclosure just because they or in their opinion they think some-one else is doing things wrong or not how they would like it done….. the fact is its solely down to the adviser and his or hers client !

  7. There is nothing more sure to wind up the adviser community than mentioning those 3 little letters – SJP.

    They do get away with murder. They do game the regulations and the rules and they do give ethics a bad name. They may have some success but it surely doesn’t excuse their behaviour.

    In the end people get found out. Unfortunately the end often takes a very long time.


    Whether SJP Partner or IFA there are a minority in this industry that let it down by not explaining costs correctly …. as this article points out there are many different charging structures out there … whether it is the average 3% IAF and 1% OAF or 5% IAF OR 0.5% OAF … do the maths …. all clients want to know is what they are paying and will they get a good ongoing service with a trusted adviser who will look after them ….. scaremongering is not helping our industry … which is already incredibly difficult and stressful but it is much needed service for clients. We all need good financial advice we can trust no matter what the size of our wealth ….

  9. Robert Milligan 24th July 2017 at 6:08 pm

    Julian they are not Whole of Market, their Agency agreement states they will only sell insurance and mortgages from providers who enhance the commission so please !!! they are Tied Agents.

    • I quite agree ~ except, as pointed out to me elsewhere, the term tied was discarded some years ago in favour of restricted, thereby categorising SJP in the same regulatory bracket as any FA who isn’t WoM in every conceivable area. There is, of course, a world of difference between the two in practice but now, from the point of view of regulatory disclosure, we’re all lumped into the same category.

  10. I really do not see how it is difficult to explain your charges. Even if it is a percentage it should also be explained in £&P within the fee agreement and disclosure documents according to the FCA rules.
    So, clearly some advisers are not conforming to the rules, which means this should see a reaction from the FCA, one would hope!
    As for the advisers being independent or restricted, SJP have it both ways according to them, so which statement is correct? Restricted when it suits, independent when it suits?

  11. Twice at social events I’ve been asked by professional people ‘You’re nothing to do with those (beep beep censored) at SJP are you?”
    The overall crux was being led to belive the transfers-in of several pensions into one SJP pension to take benefits was somehow ‘free’. When they went to take tax free cash and income they got whacked for huge exit fees and were not at all pleased.
    The overall accusation is one of opaqueness – the SJP charging structures and discloure are not client friendly or designed to be clear.
    The FCA stepping in and banning exit fees would be a great start. I thought that ahd done that but SJP seem to have bent the rules to keep exit fees high?
    In a recent social media exchange I was advised by an SJP rep (I mean Partner)that “IFAs charge 3% upfront and 1% a year ongoing”. This came as news to me.
    Anyway, never mind SJP ‘inflows’ are up and life goes on.
    “With no commission to middlemen it’s an Equitable Life Henry!”

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