SJP and Advisers Agree on £430 Million Redress Contribution

St. James’s Place (SJP) CEO Mark FitzPatrick has announced that the company has reached an agreement with its advisers regarding their contributions to the £430 million redress fund for ongoing advice issues.

In a discussion with analysts, FitzPatrick explained that the advisers are supportive of the redress framework designed for reviewing clients’ ongoing service.

“We’ve come to an understanding with our advisers that their contributions will be based on the evidence we have,” FitzPatrick said. “If advisers don’t have complete records of annual reviews, they’ll need to contribute more. On the other hand, those with thorough documentation won’t be required to contribute.”

When the £430 million redress provision was first announced in February, FitzPatrick mentioned that SJP might recover some charges from partnerships, a move welcomed by shareholders.

Today’s update confirms SJP’s plan to recoup part of the redress costs from advisers, although specific details on the amount and method remain unclear.

In its half-year report, St. James’s Place stated that the review would involve contacting clients with incomplete evidence of ongoing service and inviting them to participate. Clients with inadequate evidence will be automatically included in the redress review unless they choose to opt-out. This review covers all clients from 2018 to 2022.

The redress provision has been slightly increased to £430 million from the initial estimate of £426 million. The review process has already started, with SJP incurring £500,000 in costs this year.

SJP’s Focus on High-Net-Worth Clients

SJP’s half-year results also highlighted a £500 million cost-cutting initiative, a £32.9 million share buyback, and a 6p-per-share interim dividend. These measures were well received, with SJP’s share price rising by 24.8% as of 11:03 am.

Additionally, SJP announced a strategy to focus on high-net-worth clients, who currently represent around 9% of its £181.9 billion in assets under management. This client segment accounts for 14% of the total UK wealth market.

FitzPatrick noted that the high-net-worth market offers significant growth potential and is likely to expand faster than the affluent and mass-affluent segments.

“As we broaden our investment offerings, this will support our efforts in this segment,” FitzPatrick said. “We have advisers who are highly successful in serving high-net-worth clients. These clients often have more complex needs, so ensuring we can support both the adviser and the client is crucial.”

However, FitzPatrick cautioned that significant progress in this market is expected to be a long-term endeavour, unlikely to materialise in the next two years.