St James’s Place hit by £3bn of withdrawals in wake of overcharging scandal

aerial view of the City of London

St James’s Place customers have withdrawn more than £3bn from the wealth manager amid an overcharging scandal.

The FTSE 100 company saw investors pull £3.26bn from its funds during the first three months of 2024, according to its latest results.

Outflows means that net growth in funds invested with St James’s Place more than halved to £710m during the first quarter of 2024, compared to the £2bn recorded during the same period last year.

The UK’s largest wealth manager on Tuesday blamed the performance on clients withdrawing savings in response to the cost of living crisis and higher interest rates. It comes despite inflation being at its lowest point in two years.

The withdrawals have coincided with an overcharging scandal at the wealth manager. St James’s Place in February set aside £426m for potential refunds for clients who were overcharged for advice they had not received.

Despite this, St James’s Place, which has nearly 960,000 customers, said client numbers had grown. Its customer retention rate fell slightly from 95.9pc to 94.6pc.

Mark FitzPatrick, chief executive of St James’s Place, said the company continues to “move forward” with its review of historic fees and an overhaul of its fee structure, including its controversial exit fees for clients leaving the business early.

The former Prudential boss previously described the overcharging scandal as a “historic issue” and has denied it would damage trust between clients and advisers.

Mr FitzPatrick said the company was making good progress with its business review designed to improve efficiency and boost profitability before 2030.

The company will share the outcome of its business review alongside its half-year results in the summer.

The Cirencester-based financial adviser had £179bn of funds under management last quarter, up 16.5pc from the equivalent period last year.

Its funds held £15.7bn in UK stocks last quarter, a year-on-year decrease from £16.4bn. Meanwhile, US equities jumped from £49.3bn to £64.9bn.

Mr FitzPatrick, who took the helm last December, said that although the macroeconomic outlook remains uncertain, the business will continue to build its client base, grow adviser headcount and increase funds under management.

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