SJP questions FSCS contribution as profits dip

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Outgoing SJP chief executive David Bellamy

St James’s Place has questioned its “elevated” contribution to the Financial Services Compensation Scheme as having a negative impact on its results.

SJP’s post-tax contribution to the Financial Services Compensation Scheme decreased from £16.5m to £19.8m.

Post-tax, the firm said this had a £13.7m impact on its bottom line, compared with £15.9m for the year before.

The firm’s 2016 results released today said that its contribution helped protect clients of other firms that fail.

“The 2016 result has been negatively impacted by a continued, albeit slightly reduced year on year, high contribution to the FSCS.

“Our position as a market-leading provider of advice, means we make a very substantial contribution to supporting the industry compensation scheme, the FSCS, thereby providing protection for clients of other sector businesses that fail.

“In the last couple of years, the levy has been at an elevated level and we remain hopeful that it will return to a more normalised level in future, albeit we now expect a third year of an elevated contribution in the 2017/18 funding year.”

SJP reported a dip in pre-tax profits from £140.6m, down from £151m, while reporting record gross inflows of £11.4bn in 2016.

The firm took £510m income from advice charges, 20 per cent up on the year before.

SJP has improved the margins on its pensions business from 3.8 to 4.1 per cent. Margins on its unit trust/discretionary fund management and investment business fell from 5.6 to 5.2 per cent and 5.1 to 4.8 per cent respectively, however.

In its risk outlook for the year ahead, SJP noted the “accumulation of reputational issues” as a potential risk to the firm.

The results say: “The success of the group is closely linked with the strength of the St. James’s Place brand. An accumulation of reputational issues, for example advice failures, fraud, service issues, low client investment returns, has the potential to damage the brand, leading to reduced retention and lower levels of new business.”

“Group seeks to achieve the best possible outcomes for its clients and the cultural driver of ‘doing the right thing’ runs through the whole organisation. However, it is recognised that isolated incidents will occur and, when this is the case, the Group seeks to rectify the issue and achieve positive outcomes for clients”

Directors and the executive committee at SJP took home a combined £7.7m in remuneration, up from £6.8m in 2015.

Earlier this morning, SJP announced that chief executive David Bellamy would be leaving at the end of the year.