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Rate cut to cost James Hay up to £1.2m

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Platform James Hay says it may have to review its pricing structure as it forecasts a £1.2m hit to revenues as a result of the cut to interest rates.

Parent group IFG Group, which has published its half-year results today, says the cut to interest rates to 0.25 per cent will impact revenues for the platform by up to £1.2m in the second half of the year. It estimates a further hit to revenues next year if rates remain unchanged.

The results say: “In James Hay, the reduction of the Bank of England base rate will negatively impact revenues in the short-term.

“We continue to look at our pricing models, which may need to adapt to these circumstances as we continue to invest in the product and service proposition we offer to clients.”

Assets under administration reached £20.3bn as at 30 June, compared with £19.5bn as at the end of last year.

Overall IFG Group, which also owns advice firm Saunderson House, has posted a pre-tax profit of around £4m for the first half of the year, up 74 per cent from £2.3m in June 2015.

Across the business net inflows are up a third year-on-year from £600m to £800m, though are down 62 per cent from £2.1bn as at the end of last year.

For James Hay, IFG says new business has been hit by the lack of client book acquisitions this year.

James Hay acquired the Capita Sipp book at the beginning of last year, and also took on 4,000 Towry Sipp clients.

IFG group chief executive Paul McNamara says: “We have delivered a solid first-half performance, with further growth in revenue and profits.

“Market conditions are more challenging, impacted by the possible consequences of Brexit, political uncertainty, lower interest rates and stock market volatility. “We are cautious that the short-term trajectory for growth and profitability has therefore moderated, notably in the platform business. However, we are confident our business model is robust and see no reason to modify our strategic plans as we continue to invest in our businesses.”

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