St James's Place under regulatory scrutiny to reform fee structure - reports

investmentweek.co.uk:

A former employee said regulators have been pressuring SJP for almost a decade to overhaul its fee structure.

People familiar with the matter told the FT that the wealth manager has been discussing additional overhauls to its charging structure to satisfy regulators' concerns.

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SJP has come under fire for its expensive charges for financial adviser and its penalties for exit withdrawals.

The company's proposals to change its fees included removing early withdrawal charges for new clients by mid-2025 and simplifying fees for several of its advisory and administrative services.

However, the people familiar with the matter said SJP executives have been warned by regulators that the proposed changes may not go far enough to meet the Duty's requirements.

As a result, senior managers have been asked to justify keeping exit fees for existing clients — starting from 1% and in some cases, applicable for the first 11 years — but scrapping them for new ones, as the focus of the Consumer Duty centres on a firm's ability to demonstrate value for clients.

Regulators have also raised concerns over whether SJP's high upfront advice costs are in customers' best interests and whether the company's structure might make it difficult for clients to stop paying advice fees in the future, the people added.

SJP has argued that scrapping exit fees for its existing clients may have a significant impact on its balance sheet, since 30% of its assets under management — about $47bn — were subject to exit penalties as of June 2023.

A former employee told the FT that regulators have been pressuring SJP for almost a decade to overhaul its fee structure, as they considered it anti-competitive