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SJP: ‘Pension exit charge cap won’t impact us’

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St James’s Place says the FCA’s proposed 1 per cent cap on pension exit penalties will have “no impact” on its business.

The wealth manager controversially applies an exit fee of 6 per cent for pensions and investment bonds. This declines by one percentage point a year until there is no exit charge over six years.

In 2015 an analyst note warned regulatory change was the biggest threat to SJP’s business. UBS analyst Colm Kelly said: “A ban on the charging of surrender penalties to enable more freedom around switching would have material consequences for SJP’s earnings profile.”

And last week the FCA and Department for Work and Pensions announced plans to cap pension exit penalties at 1 per cent for existing products, with an outright ban for all new contracts. The rules apply to anyone attempting to use the pension freedoms.

However, an SJP spokesman says: “SJP is fully compliant with the rules and this change will have no impact to its business.”

Fairey Associates managing director Ed Fairey says: “SJP is eminently successsful but it charges clients a lot more than the rest of the advice market.

“In this day and age it should be game over for the exit penalty but SJP continues to operate it, while continuing to operate an internal commission market for member firms. Its business model is for yesteryear.”

SJP clients are subject to an initial charge of up to 5 per cent for Isa and unit trust investments. For pensions and investment bonds initial charges range from 2.5 to 4 per cent, then ongoing charges of between 1.5 per cent to 2 per cent.

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Comments

There are 12 comments at the moment, we would love to hear your opinion too.

  1. sanjay sanjay 2nd June 2016 at 1:22 pm

    What I would like to know, in a low inflation low growth era how SJP can make it’s clients wealthier with those eye watering charges!

  2. Looking at these charges it should be mandatory of all SJP ‘partners’ to wear striped jerseys and eye masks.

    They hardly need worry about exit penalties with charges like these. No doubt they can make up any shortfall with their vaunted educational programme – Advanced course in pickpocketing.

  3. i’m sure they will just find another way to disguise their exorbitant charges? They must have very gullible clients? My clients query our fees even though in general they are less than half what SJP charge. Either that or they are just lying to them?

  4. Of course, black is white for SJP.

  5. But Simon they don’t charge any advice related fee’s!!! At least that’s what they tell their clients – its the old bid/offer spread smoke and mirrors scenario which they hope will be hidden over time of investment.

    How the gutless FSA/FCA let them get away with this in light of RDR changes still astonishes me to this day.

  6. They just don’t give the illustrations or reports to the clients. So they never know

  7. I’m afraid it is the rest of us that are to blame. I always targeted anyone I came across that was an SJP client. It wasn’t difficult. I just produced a spread sheet showing their charges and mine. 100% conversion rate.

    The rest of you should do likewise, particularly now that exit charges are under the regulatory microscope.

  8. sanjay sanjay 2nd June 2016 at 4:27 pm

    I met an SJP partner last year who told me he only had 60 clients. I asked him what he did to secure new business, he said not much he lives off renewal income from his existing customers. He also verified that up front charges for pension transfer work as 4% with a 2% per annum retainer. You get the impression that SJP is there to make it’s Partners more wealthy and not it’s clients.

  9. Its at moments like this that I wonder exactly which members of the FCA’s senior leadership team’s families are SJP holding hostage. I think we should be told.

  10. My recent experience is as follows
    Transferred to SJP three years ago
    £50k interest only mortgage to be repaid by his 65th birthday
    Client 65 in August
    Fund Value £200,000, ( although transferred in £205k)
    Retirement Value £191,000, penalty expires when he is 70

    TFC was to be used to repay mortgage
    Lender will only extend term by 5 years and on repayment only
    Client not working ,

  11. How do they get away with no providing illustrations?.

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