St James’s Place saw its pre-tax profits slip slightly over the past six months as the group was hit by the heightened levy from the Financial Services Compensation Scheme.
According to the wealth management firm’s half year results, ending 30 June, the company’s profits before shareholder tax stood at £60.5m, down from the £67m reported at the same time last year.
David Bellamy, chief executive of SJP, said the company’s financial performance was impacted “once again” by the levy charged by the FSCS, which now amounts to £17m.
However, he said: “We remain hopeful that the elevated levy imposed over the past two years will return to a more normalised level in future years.”
We remain hopeful that the elevated levy imposed over the past two years will return to a more normalised level in future years. David BellamySJP also revealed it would ditch exit charges for clients with pension contracts written before July 1999.
This follows a review of the legacy business, which the company stated would cause a one-off cost of £8.2m.
Despite the drop in profits, the FTSE 100 wealth management group announced it was increasing its dividend, so shareholders will receive 12.33p per share, compared to the 10.72p recieved in 2015.
The report also revealed the company had ramped up the number of advisers it has by almost 5 per cent over the first six months of the year to 3,259.
Figures for new funds under management also painted a positive picture, with flows jumping to £5.3bn from £4.4bn in 2015, while overall the group’s funds under management hit £65.6bn from 2015’s figure of £55.5bn.
Mr Bellamy said SJP’s performance in the first half of the year was “testament to the reassuring consistency and resilience” of the business, particularly during a time of difficult stock markets and political uncertainty across Europe.
“While the UK’s decision to leave the EU has created a period of economic uncertainty in the UK, the challenges and responsibilities that many people face when considering how to manage their wealth and the ever changing tax considerations, remain.”
He said the group is focused on growing the number of qualified advisers it has on board, as well as improving the tools and support systems.
Last year, SJP stated it expected its FSCS levy to be around £20m (£15.9m post-tax), a 189 per cent increase on 2015’s £6.9m bill (£5.3m post tax).
Tony Catt, compliance officer at Anthony Catt Limited, said: “It is difficult to see how the FSCS levy is calculated, and I think that it should be calculated based on the complaints records of firms.
“I am sure that there would be significant correlation between firms that have a history of complaints and those that end up out of business with their clients reliant on the FSCS for redress.
“Obviously the FSCS levy must be set in accordance with the financial ability of the firms to cover the levy.”
Mr Catt pointed out SJP is still highly profitable, and said it was good to see it reviewing the exit penalties on pension business before 1999.
He added: “It would be helpful if SJP also reviewed the ties the pension business has on bonds and other products.”
katherine.denham@ft.com
