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St James's Place sets aside £426m for client refunds as shares crash

Sir Mark Weinberg: SJP founder
Sir Mark Weinberg: SJP founder

SHARES in St James’s Place crashed 30% today as the once grand member of the insurance establishment set aside £426 million for possible refunds to clients.

SJP was founded in 1991 by Sir Mark Weinberg with the backing of Jacob Rothschild, the financier who died a few days ago at 87.

The business set itself up as a provider of elite financial advice to wealthy clients but was always dogged by allegations that its charges were excessive.

Regulatory scrutiny and customer complaints have increased over the years.

Today SJP reported a loss of £9.9 million compared to a profit last time of £407 million. The dividend has been more than halved to 23.83p with future payouts clearly at risk.

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The provision of £426 million has been “established for potential client refunds linked to the historic evidencing and delivery of ongoing servicing”.

CEO Mark FitzPatrick said, in his first set of results since taking the top job in December: “We recognise that this is a disappointing outcome for everyone.”

SJP was fined £250,000 by the City watchdog in 2003 for “serious” inadequacies in its record keeping.

Critics say little has changed and that the problems at SJP are part of a wider shift away from traditional financial services providers with high charges that hit client returns.

Yesterday Abrdn, the merged Aberdeen Asset Management and Standard Life business, fell to a £6 million loss as clients withdrew £17.6 billion of funds.Numis said in a note: “It is disappointing to see another piecemeal warning/majoradverse development to the investment story in our view, rather than seeingthese issues dealt with comprehensively on one occasion.”

Back in 2019, fourteen former footballers sued SJP for £15 million alleging they had got bad advice on tax and investment schemes.

SJP opened an office in Dubai last year.

City grandee Paul Manduca remains chairman of the board.

The statement to the City today added: “A combination of theprovision we have established and an expected decrease in the level of profitgrowth in the next few years as we transition to our new charging structure,reduces our ability to invest for long term growth in our business over the nextfew years.”

Fitzpatrick says the outlook for his industry is “challenging”.

As the shares tumbled 32% to 422p, he added: “It has been a challenging backdrop for UK savers and investors, but it is at times like these that advice really makes a difference, helping people stay on course to meet their long-term financial goals. Against this background, the hard work of everyone in our SJP community to keep delivering for clients has driven a resilient business performance where we've achieved continued strong net inflows underpinned by high client retention, strong investment performance, and record funds under management.”

SJP has been criticised for years for high-pressure sales tactics that saw advisers given lavish incentives ranging from Montblanc pens and Mulberry bags to all-expenses paid holidays.

The top partners were given diamond encrusted cufflinks and broaches.