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Nic Cicutti: Why SJP must be smug after Which? report

Far from being caught red handed, SJP has brushed off the concerns of the consumer group

Is it possible to feel conflicted by something you have read about St James’s Place? Because that was my experience after reading the recent Which? mystery shopping sting on SJP.

The background to this story will be known to most Money Marketing readers. Put simply, researchers from Which? went and talked to 12 SJP advisers, chosen randomly, telling them they had £100,000 to invest and they needed independent advice on how to do it.

The Which? researchers had two key aims in mind: the first was to find out how SJP’s partners would respond when asked about their charges. The second was how they would describe their status as advisers.

The outcome of the Which? investigation was that three out of 12 SJP advisers did not explain clearly they provided restricted advice. Which? claims this is in breach of FCA rules post-RDR, whereby “financial advisers in the UK need to explain whether they offer restricted or independent advice.”

In fact, the FCA’s own website is not exactly a model of clarity in its guidance to advisers. It says: “You must tell customers that you provide restricted advice and how it is restricted – by product or by provider. You must do this in writing and also verbally before you give the customer any advice.”

The issue would be whether the SJP advisers believed they were providing the Which? team with advice at their “free” meeting.

In the original Which? article on the subject, you can sense the research team’s annoyance at the fact they did not entirely manage to catch SJP’s hapless advisers with their pants down: “SJP’s advisers were highly skilled at saying just enough to be within the rules, but using carefully selected facts to give a very misleading picture…”

Blog: Calling out Which? on its SJP advice probe

In other words, the overwhelming majority of SJP’s hapless advisers generally complied with the rules, bending them to suit the company’s narrative. Quelle surprise.

The disclosure discussion

A similar picture emerged when it came to charges disclosure. Eight out of 12 SJP advisers more or less complied with FCA rules on charges disclosure. Four “failed to talk in detail” about the likely costs of such an investment at the free introductory meeting where they met Which? researchers.

For Which? this is a heinous crime: “This is directly against the FCA’s guidelines for advisers, which state they are supposed to tell clients both verbally and in writing about the cost of their services,” the consumer group spluttered.

The problem is, again, the FCA’s own guidance is not clear. Its website states: “You must disclose your charging structure to a client upfront and in writing, so they have the information in good time before the advice process starts. You must also agree and disclose the total charges your client will pay as soon as you know this.”

Here, the emphasis is on “before the advice process starts”. Were SJP’s 12 advises in breach of this guidance by not disclosing everything at the initial meeting? My guess is notwithstanding Which? going hyper on the issue, this is a razor-edge decision.

Let’s be honest here: this was, at the end of the day, a pretty weak outcome to a Which? investigation. Not a single “discovery” about SJP is remotely new.

In the interests of research, I went through 25 of the most commented articles in Money Marketing, and on other websites too, over the past three years. Each story, certainly the comments below them, all repeat precisely the same claims from advisers about the way SJP operates.

There are references to the extraordinary six-year redemption penalty on investments, to a blurring of the distinction between independent and restricted advice and to high and obscure charges, particularly on the pensions front.

SJP makes transparency commitment after charges criticism

In a vague echo of the old-time “News of the Screws” exposé of suburban brothels, where the reporter would always write “I made my excuses and left” at the end of the piece, Which? talks of handing its findings to the FCA. Somehow, I do not see FCA goons beating down the doors of SJP’s head office with sledgehammers on this one.

Indeed, if I were SJP chief executive David Bellamy right now, I would be feeling fairly smug. Yes, an FCA suit might come round and have a few quiet words, but this is not exactly on the perp walk scale, in terms of offences.

Commission in all but name

Is there a problem with SJP? Yes, absolutely. The company does sail close to the wind, both in terms of charges and status disclosure. It has done so for years.

Notwithstanding Money Marketing trying to draw a distinction between product fees and commissions paid to its partners, I agree with Which? that SJP’s remuneration system is a commission in all but name.

SJP’s charges are high, opaque and it traps its clients in a closed ecosystem where, even if they wanted to leave in the first six years, they would face heavy penalties for doing so. Some fund returns are also weak, with some funds featuring in Bestinvest’s most recent Spot the Dog survey. All of its funds are affected by the company’s charging structures.

But aside from some splutters of synthetic indignation in the national media and rewrites of Which?’s press release filling up a few column inches, my gut tells me this is one that got away.

Nic Cicutti can be contacted at



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There are 11 comments at the moment, we would love to hear your opinion too.

  1. Robert Milligan 3rd August 2017 at 10:51 am

    Nick, a very good article, perhaps this should replace the “Which” report to the FCA, SJP should be Suspended from trading until this situation is once and for all calcified by the Financial “Conduct” Authority, and the Treasury Select Committee and the Inland Revenue, Please explain how if some of the SLP remuneration, ie Office Allowance, Compliance, Point of Sale Documentation, Conventions, VQB , Financial Support by AMC rebates, O Yes and monthly parking spaces! can this Sales Force be nothing other than Tied Agents, paid by what only can be called Commission, the above is an absolute disgrace, and Untenable Post RDR. Very Happy to discuss this subject in the Public Domain

  2. In my humble opinion, they breach TCF Outcome 6 – unreasonable barriers et al. Clients come to us and we have great difficulty dealing with their SJP Investments at the client’s expense. The exit charges are a real barrier and should be banned. Pay up front and be done with it.

  3. Another rehash of an old article. Give it a break!

  4. Personally never take much notice of Which? nowadays, too much attempted headline grabbing and what just looks like self promotion.
    We all know the issues with SJP but this Which? investigation will get nowhere as it was so poorly done. Would have been much better if they had taken £100,000 and gone through the full process up to receiving a written recommendation before making comment, what they did was only half the story, as Nick says SJP can safely file this report in the shredder and forget it.

  5. Hah
    I think I will add that to my Client Agreement Nic, if that’s now an acceptable standard.

    We “generally” comply with the rules.

    There seems to be some sort of an SJP apologists group forming at Money Marketing. Where will it all end?

  6. I don’t think they were smug after the report – they have always been smug.

    Some time ago at a meeting at Canary Wharf I asked the regulator why they don’t include the status of firms on the consumer website under the register. The answer (which amazed me and may surprise you) was “We are not a commercial organisation”

    If disclosure is so important (which it is) why on earth is the status not clearly indicated on the register?

  7. Yes, a well written piece, Nic. That said, “You must tell customers that you provide restricted advice and how it is restricted – by product or by provider. You must do this in writing and also verbally before you give the customer any advice” seems pretty crystal clear to me. How might it be clearer?

    On the other hand, the FCA’s requirement that “You must also agree and disclose the total charges your client will pay as soon as you know this” is all very well BUT, with so many elements (adviser charges, product charges, fund charges and platform charges), the total cannot be known until you’ve put your SR together. So the total CANNOT be disclosed at the first meeting. All you can tell the prospective client at the first meeting is what YOU propose charging for your SR, in which everything else will be set out as part and parcel of it.

  8. Agree with Julian, it is often impossible to tell a client the cost at an initial meeting, but if you work on a contingent charging model so your SR is also “free” which would be the case with SJP, I assume the first time the client sees the charges will be when the SR is presented, even then they may be tucked away in an illustration. If the SR is presented at another meeting at which applications etc. are completed the client has nothing to compare and is very likely to just go along with it.

  9. If the Which researchers actually told the 12 advisers at the outset that they wanted independent advice then they should have been told by them that they couldn’t provide it! End of! Any other outcome can understandably lead to the conclusion that they were ALL pretending they’re independent.

  10. Elsewhere, we read that SJP’s £1Bn UK Equity Income fund remains firmly on Best Invest’s dog list. I’ll bet they don’t go out of their way to disclose that either.

  11. It is interesting that the Which report perhaps should be replaced with the Witch Hunting report. Many advisers who claim to be Independent are in Reality similarly Restricted Advisers. The term Independent Financial Advisers- were penned and sponsored by Sub Standard Life when trying to impress the public to identify life assurance ( endowment salespeople and pensions sellers ) against Brokers for commercial lines – and to mislead the public into believing they were ” a breed apart”. The reality is as we have seen they are poorly qualified – and willing to being sponsored or led by the nose, by their owners and/or sponsers – relying on hefty commissions they can earn, as Agents, – directly from their Pricipals ( ins co’s and other percentage commissions generating providers) – without proving the value of their advice/service or their Real Worth. Interestingly these sales people are being replaced by Solicitors and Qualified Accountants – who operate these pyramid selling schemes – losing much of their professional status by becoming sales people.

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