SJP has announced that they will be set to overhaul the firm’s fee structure following regulatory pressure, but only for clients who join them post-2025. This means that all existing clients, and those who invest with the firm between now and 2025, will not benefit from these changes.

In a Stock Exchange notice on 17th October, the £158.6bn giant said the updates will result in three key changes: the removal of early withdrawal fees, plus any new investment bond and pension business will operate with initial charges, together with ongoing charges from 2025.

SJP announces fee overhaul for post-2025 clients; Matthew Douglas

In a Stock Exchange notice on 17th October, the £158.6bn giant said the updates will result in three key changes: the removal of early withdrawal fees, plus any new investment bond and pension business will operate with initial charges, together with ongoing charges from 2025.

SJP has long faced scrutiny from industry professionals for their ‘expensive’ charges and exit penalties, and now the UK’s biggest wealth manager has bowed to pressure to ensure that it complies with new customer duty requirements. .

The changes will come into effect in the second half of 2025, meaning that clients still have to wait two years before they’ll benefit from lower fees.

The firm has also announced that it plans to improve disclosure on fees by “unbundling” them into component parts – meaning that there will now be separate charges for initial and ongoing advice, plus product administration and investment management. Currently, it discloses fees on an ‘all inclusive’ basis – meaning that many clients struggle to understand what they’re actually paying for and how much it’ll cost.

SJP has also stated that next year it will introduce a ‘more consistent’ approach to fund charges to reflect the value that each fund provides. This move comes after the firm’s share price fell by over 20% in mid-October. 

Matthew Pescott Frost shares his views on the announcement:

“These changes are ultimately all to do with consumer duty rules. SJP has got away with it for so long, but now they’ve reluctantly been forced to make these alterations – even though they’ve still got two years to go before these new rules actually come into effect. Pressure has definitely been building on them for some time now.

“The new FCA consumer duty directive means that in our industry, you now have to justify everything that you do – and rightly so! If you’re recommending a product to a client, regulators have every right to ask you to justify why you recommended it, to ensure that you’re providing the correct option and working solely in the best interests of your client. 

“We’re likely going to see some unhappy SJP clients as a result of these changes, as ultimately, their existing customers (and those from now until 2025) will still be subject to the same high fees and exit charges that we’ve become accustomed to. Share prices have been falling significantly since these rumours began, which is not a surprise.

“After 2025, we should see a much more dynamic market, as clients at SJP will be free to move if they’re unhappy without facing any large penalties. Currently, exit fees with the firm lie at 6% in the first year of investments, then slowly reducing each year for six years – meaning that it can be very difficult to move. Only after spending six years with the firm can customers leave without paying any fees – up until 2025.

“Here at Matthew Douglas, we very much welcome these new and improved consumer duty regulations. Feel free to get in touch with our advisers if you have any concerns following the SJP announcement.”