St James's Place Wealth Management Plc · DRN-5756256

The complaint Mr A complains about the ongoing advice fee charged by St James’s Place Wealth Management Plc. He believes he only received initial rather than ongoing advice and so should receive a full refund of the charges for a service he didn’t receive. What happened In January 2017 Mr A met with Mr C, a partner at St James’s Place Wealth Management Plc (“SJP”), to discuss his retirement provision. He was 43 and intended to retire at 65. A fact-find had been compiled in August 2016, capturing Mr A’s personal and financial circumstances and those he shared with his wife. Mr A had two personal pension plans, an Executive Pension plan with provider S valued at just over £11,240, and a personal pension with provider F valued at around £129,351. His employer also contributed to a workplace Group Personal Pension (“GPP”) with provider R valued at around £14,160, but Mr A wasn’t making regular contributions from his salary. Mr A had cash savings of £20,000, but his main financial priority was to spend around £200,000 developing his residential property. He intended to repay the outstanding mortgage of £550,000 by age 60. The adviser recommended Mr A switch the two personal pensions totalling around £140,580 to a new SJP Retirement Plan, rather than into his employer’s GPP. While the charges for the SJP plan of 1.68% were higher than his employer’s plan of 0.48%, Mr A was told he’d benefit from regular face to face advice. SJP’s initial advice is usually charged at 4.5% of the sum invested, but the level of growth required to outperform Mr A’s existing schemes was 0.94% for the S policy but 1.40% for the F plan, which was higher than the adviser would normally recommend. So Mr A was offered a discounted initial advice fee of 1.9% of the amount invested (£2,671) to reduce the critical yield to 0.98%, plus ongoing advice charges (“OAC”) of 0.25% per year. Unlike many firms, SJP does not deduct its initial advice fee from the funds to be invested, instead it levies an Early Withdrawal Fee (“EWF”) for the first few years of each investment, reducing by 1% per year, so Mr A would be liable for a an EWF starting at 4% diminishing over four years for the initial transfers. Mr A’s attitude to risk (“ATR”) was assessed as “medium”, so his plan would be invested in SJP’s balanced portfolio. This advice was confirmed in a suitability letter dated 18 January 2017. A further meeting took place in February 2017 while the transfer of his pensions to SJP was in progress. As the employer contributions of 10% of Mr A’s salary would be unlikely to provide sufficient income in retirement, the adviser recommended he maximise his personal contributions each year to benefit from the tax relief. So Mr A was advised to make a lump sum contribution of £23,540 gross (net £18,832) to utilise the carry forward allowance from the 2013/14 tax year which would otherwise be lost. The funds would be invested in the same way as the initial transfer in. This advice was captured in a second suitability report issued on 23 February 2017. At the first review meeting in March 2018 Mr A’s SJP plan was valued at around £173,805, but there’s no updated valuation of his workplace GPP. Mr A was advised to make a gross contribution of £10,695 (net £8,556) to utilise the carry forward allowance from the 2014/15 tax year. As Mr A was comfortable taking more risk (“upper medium” rather than “medium”)

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with this contribution, it would be invested in SJP’s “Adventurous” portfolio, with more weighting in global equities. The illustration produced at the time explained that the initial advice fee was 4.5% (£482), plus annual OAC of 0.25% (£27) to pay for the ongoing relationship with the adviser. It also explained the product charge of 1.5% and investment management charge of 1% would be waived for the first six years of any investment, but an EWF would apply of 6% in the first year reducing to 1% in year six would apply should Mr A move away from SJP. A further meeting took place in October 2018, which recorded the value of the SJP plan as £185,765 and the GPP as £14,159. Mr A was again warned about relying on his employer contributions so was advised to make a gross contribution of £11,000 (£8,800 net) utilising the remainder of the 2015/16 carry forward allowance. This advice was confirmed in a suitability letter and illustration dated 16 October 2018, which set out the 4.5% initial advice fee as £495 and the 0.25% annual OAC as £28, and it reiterated the explanation of the EWF diminishing from 6% to 1% in the first six years. The November 2019 review meeting focussed mainly on charges, as Mr A had contacted SJP to ask about turning off the OACs. To ensure he understood the consequences of no longer having reviews or access to an adviser, SJP had asked Mr A to sign and return a “Declaration to Cease Ongoing Advice” form. Mr A said the adviser had been “quick off the mark” with the cancellation and wanted to understand the charges. Mr C provided a schedule of fees to the end of October 2019, explaining Mr A was paying around 1.40%, well below the industry average of around 2%, which appears to have reassured Mr A, as he didn’t return the cancellation form. In November 2020 and March 2021 Mr C emailed Mr A to arrange a catch up to review his investments, but he didn’t respond, so no reviews took place. In June 2023 Mr A asked for a breakdown of SJP’s charges and what service they entitled him to. He then requested a refund of any charges he’d paid since 2019 when he thought they should have stopped. Mr A said he hadn’t needed ongoing advice, as he’d made the adviser aware that following the initial transfer of his pension plans to SJP, he wouldn’t be in a position to make contributions until after his property renovation, (which was completed in 2020). And as he didn’t consider the 2017 suitability letter to be an accurate reflection of the discussion with the adviser, he shouldn’t have to pay for the advice. He essentially felt the need for ongoing advice was misrepresented, so he complained to SJP in September 2023. In November 2023 having had no response, he referred his complaint to this service. In December 2023 SJP responded upholding Mr A’s complaint in part. They provided copies of the suitability report and illustration from the 2017 meeting, which stated Mr A had wanted financial advice as he moved towards retirement, which wasn’t available with his workplace plan. With regard to Mr A’s request to turn off the OACs from November 2019, SJP said Mr A had been provided with a breakdown of charges, but as he hadn’t returned the completed cancellation form, they’d continued until May 2022. Mr A had received reviews in 2018 and 2019 and had been invited to reviews in 2020 and 2021 but hadn’t responded. So SJP offered to refund the OACs for the period from 2020 to May 2022 (£1,615.21) plus 8% interest (with tax deducted) plus an additional £250 for the distress and inconvenience caused, total redress of £2,149.47. Mr A wasn’t satisfied with SJP’s response and wanted this service to consider his complaint in respect of the charges for the other years. He’d been under the impression the 1.9% discounted fee would apply to all contributions, so he shouldn’t have been charged 4.5%, the OAC had increased without him being informed, he didn’t need ongoing advice because the lump sum contributions had been discussed in the initial advice meeting, and in any case the EWF meant his investments were effectively tied in. He couldn’t tell if the charges refund had

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been calculated correctly and didn’t think £250 was sufficient for the distress and inconvenience he’d experienced. In June 2024 our investigator reviewed the complaint. In summary he didn’t think SJP needed to do more in terms of the charges, but he recommended an increase in the compensation for poor service from £250 to £500. SJP accepted this, but Mr A remained unhappy so asked for an ombudsman’s decision. I issued a provisional decision on this case in February 2025 which focussed on the complaint points summarised above. I didn’t consider the suitability of the advice itself. Provisional findings For brevity I’ve summarised my findings as follows. As a regulated financial firm SJP had to comply with various rules and principles when advising Mr A. Many of these can be found in the Financial Conduct Authority handbook, in the Conduct of Business Sourcebook (“COBS”) and the Principles for Business (“PRIN”) as well as updates and guidance which had to be read alongside. Initial advice charge Financial advisers are entitled to charge for their professional services, and an “initial advice” fee is usually calculated as a percentage of the total amount of funds the customer has been advised to invest. This is generally payable whether or not the consumer accepts the advice and is typically deducted prior to the funds being transferred or invested in the new product. SJP’s usual initial advice fee is 4.5%, but in Mr A’s case the adviser had agreed a discounted initial advice fee of 1.9% (£2,671) based on the total value of the plans transferred to SJP. But SJP does not deduct its initial advice fee from the amount to be invested. Instead, it’s factored into the AMC, and it applied a diminishing EWF from 4% to zero for the first four years, payable if Mr A were to transfer away from SJP. Mr A said he only received documents explaining SJP’s charging structure after he complained. But SJP’s recommendation letter dated 18 January 2017 says that the adviser gave Mr A its “Key Facts about our Services and Costs” document and the “Key Features Booklet and illustrations for the plan”, so I thought if that hadn’t happened, he would’ve raised it at the time. The “What are the charges?” section of the illustration produced on 18 January 2017 set out SJP’s charges for the advice and the products they recommend. This is equivalent to an AMC of 0.86% per year, coupled with an EWF of 3.4% for the first year reducing to nil after the four years (from investment date) and that the product fees of 0.17% of the amount invested and annual fee of 0.61% a year are similarly waived, unless funds are withdrawn within four years. And under “How much will the advice cost?” it gave the initial advice fee as 1.9%, and explained an OAC of 0.25% would be deducted from the investments as set out in the “Welcome to St James’s Place” brochure Mr A had been given by the adviser. SJP’s subsequent suitability letter dated 23 February 2017 issued once Mr A had accepted the advice to transfer his pension plans to SJP concerned his retirement provision. Being around twenty years from retirement was a reasonable investment horizon in which to boost his pension. The fact-find captured Mr A’s intention to

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spend around £200,000 refurbishing his property, although this wasn’t reflected in either the January or February recommendation letters. But the adviser warned Mr A his employer’s pension contributions alone wouldn’t provide sufficient income in retirement, so encouraged him to make lump sum contributions to utilise the unused carry forward allowance from previous tax years. The illustrations relating to the 2017 and 2018 lump sum contributions also included the charges. In both cases the initial advice fee is expressed as SJP’s usual fee of 4.5% of the contribution amount (which includes the AMC of 1.5%), and the EWF which reduces from 6% to nil over six years. So it looked like the charges had been set out clearly and explained. Mr A thought “logically” the 1.9% discounted fee should apply throughout, as he’d made the lump sum contributions within the “free initial assessment period”. But I said the reduced fee was only offered for the transfers of Mr A’s personal pensions to SJP, because its charges are higher than his employer’s GPP, a factor an adviser is obliged to consider when recommending a switch. No such comparison would apply in respect of lump sum contributions, as those funds originated from cash savings rather than being switched from an existing pension. Ongoing advice Mr A was told to expect a statement around the plan anniversary, and for the adviser to contact him to arrange an annual review. Mr A says he instigated the March 2018 meeting, having been sent the “rather pointless” annual statement, as well as other generic information about the performance of his funds. And as the meeting was solely focussed on the lump sum contribution, he didn’t consider it to be a “review”. He felt the information provided by the adviser was inadequate, as rather than a detailed analysis of the performance of his portfolio compared to internal and external benchmarks, he was just given a breakdown of the asset mix using information available from SJP’s website. The review letter dated 26 March 2018 confirmed the meeting had focussed on retirement planning, and that Mr A had been advised to make a lump sum contribution of net £8,556 to utilise his 2014/15 carry forward allowance, which would be invested in SJP’s “Adventurous” portfolio, as Mr A was prepared to take slightly more risk. The accompanying Illustration for this contribution dated the same day sets out the same charges and EWF as in 2017. As the investigator explained in the June 2024 call, so long as there’s been some contact with the adviser in which the client’s circumstances are reviewed, there’s no prescribed structure or content of an annual review meeting. Other than the general provisions in COBS 9 around “suitability” which requires the adviser to ensure the recommended product or service meets the consumer’s needs, objectives and ATR. So while the contribution was the main recommendation, the contents of the March 2018 letter indicated there had been some review of Mr A’s circumstances including his earnings, emergency fund, cash savings, mortgage and so on, and a discussion about matters such as investment strategy and ATR. Similarly, the recommendation letter following the October 2018 meeting mentions an “in depth” discussion around Mr A’s retirement planning, which I think is likely to have touched on Mr A’s ATR when recommending how those funds be invested. I’ve not seen any documentation from the November 2019 meeting, other than that Mr A asked for a breakdown of the charges he’d been paying. It's not clear how Mr A came to be advised by Mr C, but it seems he approached the adviser, which suggests he felt he’d benefit from some kind of financial advice, particularly in relation to retirement planning. An adviser’s role is to make suitable recommendations having considered the consumer’s financial circumstances and objectives. People may have competing financial priorities, but I think it was

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reasonable for the adviser to make Mr A aware of the shortfall in his retirement provision and point out the benefit of maximising the tax relief on pension contributions. In my view it would not have been suitable advice to simply endorse Mr A’s intention to prioritise refurbishing his property, without recommending he contribute to his pension plan. I think this met the requirement to act in the client’s best interests, and I don’t agree the recommendation letters weren’t “fit for purpose” as Mr A claims. Mr A is also concerned about SJP’s record keeping, the adviser’s use of template letters and inconsistencies between when documents were created, and dated and says he didn’t see particular documents until after he complained. I think it’s likely some documents will be created prior to a meeting and finalised after the discussion, and I can’t be sure when particular documents were shared with Mr A. But from what I’ve seen, I think he was provided with sufficient information about his pension. Although I’d have expected the adviser to ensure he understood SJP’s charging structure and addressed his query about the OAC discrepancy. I’ve explained why I don’t agree with Mr A that the discounted 1.9% initial advice fee negotiated in 2017 for the transfers to SJP should also apply to subsequent contributions. Mr A also maintains that if he’s charged an initial advice fee OACs shouldn’t apply, as effectively SJP is paid twice. Mr A was informed that once he’d established a relationship with SJP, he’d be charged OACs which entitled him to annual reviews and access to tailored financial advice. Regardless of whether he proactively sought a meeting he did receive financial advice from Mr C, which SJP makes clear is not free. I disagree there was no point Mr A having annual reviews while the EWF applied, as the investments are “tied in”. While an EWF would apply if Mr A left SJP within the relevant period, the investments within his plan could be switched, and twenty free switches are permitted each year. So if the adviser had identified a change in Mr A’s circumstances, objectives, ATR or capacity for loss which meant the investments were no longer suitable, he could recommend and make changes if appropriate. I understood why Mr A wanted to understand SJP’s charging structure and had queried why the charges for the initial and subsequent investments differed. But I thought it was reasonable for SJP not to stop the OACs unless Mr A returned the confirmation form, as he’d said he wanted time to think about it. I was satisfied SJP had invited Mr A to review meetings in 2020, (when he might have had capacity to contribute more to his pension following the completion of the property refurbishment), and 2021, but as no further review meetings took place after 2019, SJP offered to refund the OACs for 2020, 2021 and up to May 2022, totalling £1,615.21 plus 8% simple interest (less tax on the interest). But I didn’t consider it fair or reasonable for Mr A to receive a full refund of all the advice charges since inception, as he did receive initial advice and then review meetings with the adviser in 2018 and 2019, and such services are chargeable. There did appear to be an inconsistency with the OAC percentage figures in the documentation. The January 2017 illustration expressed the OAC as 0.25%, in the February 2017 illustration it’s 0.5%, but in the March 2018 illustration it’s down to 0.25% again. So I asked SJP to clarify this and ensure Mr A has been charged correctly, and to review its refund offer to ensure it was calculated correctly. I explained that unless it conflicts with existing allowances or protections, redress relating to a pension complaint is usually paid into the pension plan. But when paid in

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cash we’d normally make a notional reduction to represent the tax the consumer is likely to pay on the income that sum would generate in retirement. However as SJP’s offer only deducted tax on the interest element, I wouldn’t require the redress to be calculated differently. And in view of the difficulties Mr A experienced in trying to obtain clarity about the charges on his plan and other service issues I agreed with the investigator’s recommendation that SJP should pay compensation of £500, rather than £250. Responses to the provisional decision SJP’s response • SJP accepted the provisional findings and clarified that a new illustration had been produced in April 2017 expressing the OAC as 0.25%, and confirmed Mr A has been charged 0.25% throughout. Mr A’s response Mr A responded at length. I’ll summarise his main points: • He disputed the way the EWF was described in the provisional decision. He still thought it unfair that he’s been charged both for initial and ongoing advice. • He provided a screenshot which he said supports his position that the discounted 1.9% initial advice fee and AMC of 0.86% (made up of the OAC of 0.25% and the product fee of 0.61%) would apply to all future contributions, not just the transfers of his two plans to SJP. • He received an illustration for the transfer of the F plan but not the S plan so asked for clarification of the AMC which applied. • In October 2018 he was notified his product had been changed from a SJP Retirement Plan to a Retirement Account, with different terms and conditions, although he’d been told this wouldn’t affect his charges. The illustrations he received in 2017 erroneously referred to a Retirement Account which led to his misunderstanding of the charges. • He accepted there may have been value in receiving ongoing advice to review his investments and utilise the free switches. But he maintained that the meetings where his contributions were discussed had been “initial advice” rather than annual reviews, and so he shouldn’t be charged twice. • He maintained he didn’t receive the copies of documents provided to this service which he says were produced after the meetings when they were supposedly shared took place. • This service shouldn’t “turn a blind eye” to discrepancies in documents he received and the versions SJP provided to this service, suggesting the use of templated letters which means SJP’s submissions cannot be relied upon. • He wanted to check if the £500 recommended for the trouble and upset was in addition to the £250 already offered by SJP. And he’d prefer the compensation to be

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paid into his pension rather than in cash if that meant tax would not be deducted from the interest element. I asked SJP for its comments on the change in terms and conditions and Mr A’s other points. In response SJP confirmed the following: • The pension transfer in 2017 was to a Retirement Plan, as that was the only product available at the time. The migration to the Retirement Account (which provides greater flexibility) happened 18 months later and couldn’t have been foreseen by the adviser. • The suitability letter confirmed that an illustration had been provided and the version on the file was created prior to the suitability letter or the plan application. • The special terms (discounted fee of 1.9%) only applied to transfers in as set out in the illustration and are specific to each piece of advice. The suitability letter contained some generic reference to contributions but there’s no mention of an imminent lump sum contribution, nor was it included in the illustration. • It’s not unusual to have more than one version of a suitability letter pre- and post- advice, and they didn’t think this affected the suitability of the advice itself. They have no reason to think Mr A didn’t receive copies of the illustrations, and that the charges were fully explained. • As part of the review process the adviser would assess the suitability of the ongoing arrangement when recommending additional contributions to the Retirement Plan. But if the existing funds remained suitable there would be no need to switch, particularly so soon after inception. • They’d agreed to the investigator’s recommendation for compensation of £500. What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. I’d like to thank both parties for their patience as I recognise the complaint has been outstanding for some while. I assure Mr A I have read his response in its entirety, but it hasn’t caused me to depart from my provisional findings. I will however address some of his points for completeness. I appreciate Mr A’s concerns about the adviser’s apparent use of a templated letter meaning he received a version including erroneous information about how he came to be introduced to SJP, and the discrepancies between the version of documents held on SJP’s file and the ones Mr A received. But I’ve seen no evidence this impacted the advice or service he received, so I don’t think these matters caused him any actual detriment. And I think the compensation of £500 is sufficient for the trouble and upset caused. I remain of the view it was reasonable of SJP to only apply the discounted advice fee of 1.9% (from its usual 4.5%) to the initial transfers from Mr A’s pension plans to the SJP Retirement Plan, as it was only relevant because SJP’s charges being higher than those for the F plan, a consideration which didn’t apply to lump sum contributions. To correct Mr A’s understanding, there was no “initial free assessment period” following the first meeting with

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the adviser within which all transactions are made without charge. I also don’t agree with Mr A’s position that because the benefit of boosting his pension with lump sum contributions may have been mentioned in the initial meeting in January 2017, he shouldn’t be liable for an advice fee based on the value of those contributions when he finally made them later in 2017 and in 2018. The illustration from January 2017 covers both plans, as it quotes a transfer value of just over £140,580, which is the total of the F and S plans. This states the AMC as 0.86% plus the EWF reducing over four years. I’m sorry if Mr A assumed that the charges set out in the January 2017 illustration would apply to any future contribution he made, but I don’t think that was reflected in the documentation. I think it was made clear to Mr A that SJP would charge an advice fee based on the value of funds invested when a formal recommendation is made, as well as ongoing advice charges which entitled him to at least an annual review of his circumstances, objectives, ATR and investment strategy, and access to a dedicated adviser and for his funds to be invested in one of SJP’s portfolios. It wasn’t clear in the provisional decision (corrected now in the background) that Mr A was initially transferred into a SJP Retirement Plan (RP), and then when SJP introduced its Retirement Account (RA), his plan was migrated to an RA later in 2018. A RA provides greater flexibility about how benefits can be taken at retirement, as an RP only offered the options of purchasing an annuity to provide a regular income or setting up a new plan to provide drawdown. I understand Mr A was concerned that the change from the RP to the RA with new terms and conditions would mean increased charges. I’ve reviewed the charges sections of the terms and conditions for both products, and most of the information is consistent, except that the RA AMC is shown as 1.50% rather than 1.25%. But as SJP has given an assurance Mr A has always been charged 1.25% I don’t think the move to the RA has disadvantaged him. I also think Mr A has misunderstood the paragraph in the 2017 illustration which he says led him to believe the 0.86% discounted AMC would apply to any contributions he made in the future. It explains that SJP’s overall advice fee is made up of the AMC plus the diminishing early withdrawal fee (EWF), which applies to each individual contribution from the investment date of that particular contribution until the relevant EWF period has elapsed. The EWF usually applies for six years from the investment date, but SJP had agreed special terms for the initial transfer so the EWF on that only applied for four years. As I understand it, Mr A made his last contribution to the plan more than six years ago in 2018, so an EWF will no longer apply to any element of his plan now. Although in his original submission Mr A said he had no need of ongoing advice as the EWC meant no changes to his plan were possible, he seems to have accepted that following a review the adviser could’ve made changes to his investments had he considered it appropriate. It might not have been necessary, particularly so soon after the original investment choices were made, but that doesn’t mean there was no point in having annual reviews to update his financial and personal circumstances which can change from year to year, particularly as his property refurbishment was nearing completion. SJP was entitled to charge both for the initial advice in respect of its recommendations, plus OACs for the ongoing relationship as set out in its terms of business. And it was reasonable for SJP not to have cancelled the charges in 2019 when Mr A failed to return the confirmation form while he considered his decision. Mr A could’ve had reviews in 2020 and 2021, as the adviser contacted him to arrange these, but he didn’t respond. SJP has offered to refund the OACs for 2020, 2021 and up to May 2022 when they were finally stopped and I don’t think it needs to do more in this respect.

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SJP’s original offer was a cash sum of £1,899.47 being the amount of those fees, plus 8% simple interest per year to the date of the offer, less tax on the interest. I assume SJP’s offer remains open to Mr A if he now wishes to accept it. I’m not going to ask SJP to pay the redress into Mr A’s pension plan, as that would require the calculation to be done differently, based on investment performance rather than applying 8% simple interest. Provided it won’t exceed his annual allowance Mr A can of course make an equivalent contribution to his pension plan if he wishes. Putting things right • In respect of the trouble and upset SJP should pay Mr A £500. If it pays Mr A its offer as set out in the final response letter which includes compensation of £250 it only needs to pay an additional £250 (so £500 in total). • In its offer SJP deducted income tax from the interest element of the award. It should let Mr A how much has been taken off and provide a tax deduction certificate if he asks for one, so he can reclaim the tax from HMRC if appropriate. My final decision I uphold Mr A’s complaint in part. St James’s Place Wealth Management Plc should put things right as set out above. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr A to accept or reject my decision before 12 September 2025. Sarah Milne Ombudsman

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