James Hay to review pricing as interest rate cut drags on profits

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Platform James Hay is review its pricing structure for 2017 as it predicts the Bank of England’s cut in interest rates will hit its second half revenue this year by more than £1m.

The announcement was made by IFG Group, the parent of James Hay and IFA Saunderson House, this morning as the company released its results for the year to October.

While assets under administration at James Hay increase from £19.5bn to £21.9bn, client numbers were broadly unchanged.

The Bank of England cut its flagship base rate of interest from 0.5 per cent to 0.25 per cent in August. IFG said this is likely to cut £1.5m from James Hay’s revenue as we move through the second half of 2016.

IFG says: “We are conducting a review of pricing for 2017 to ensure we continue to provide a safe and secure service for our clients, as well as an appropriate return for shareholders.”

Saunderson House added around 130 new clients and £500m in assets over the period, taking its totals to 1,945 and £4.5bn respectively.

Total assets for IFG Group are up 12 per cent over the period.

Chief executive John Cotter says: “Continuing market uncertainty, the impact of Brexit on client activity, and changes to interest rates are impacting the group revenue growth trajectory. In particular, revenue growth has slowed in James Hay compared to 2015, and our continued investment in that business, together with the fall in interest rates, has lowered its profits compared to the prior year. Saunderson House continues to deliver meaningful growth in assets, clients, revenues and profits.

“Our strategic focus remains unchanged. The group is well positioned with two profitable businesses, each serving clients with distinctive propositions in attractive segments of markets with strong underlying fundamentals. As we move into 2017 we are looking to accelerate the implementation of our strategy and will continue to invest in both businesses to position the group for future growth.”