St James's Place Wealth Management Plc · DRN-5342313

The complaint Mr N has complained, with the help of a personal representative, about the suitability of the advice he was given by an adviser linked to St James’s Place Wealth Management Plc (“SJP”) in 2015 to switch a number of his pensions to an SJP Retirement Account (RA). He’s said that the costs of switching, and the overall cost of the RA were not explained in full to him and due to the higher charges, it was not in his best interests to move away from his existing pension providers. He has also complained that despite paying ongoing adviser charges (OACs) SJP has failed to provide any meaningful reviews since the inception of the plan. As a result of the unsuitable advice Mr N feels he has suffered a financial loss. What happened Mr N met with an adviser who I will refer to as Mr B. Mr B worked for a business that was a representative of SJP. However, although Mr N dealt only with Mr B I will refer to SJP throughout for ease of reading. Mr N engaged the services of Mr B in 2014. They were old school friends and had reconnected at a mutual friend’s wedding. The adviser has said that following the wedding Mr N approached him because he wanted Mr B to review his pension and financial situation. Between August 2014 and March 2015, they met three times to discuss Mr N’s existing pension arrangements and future contributions. In January 2015 a Confidential Financial Review was carried out with Mr N where his personal details, financial circumstances and his needs and objectives were recorded. They were as follows: • He was 46 years of age at the time of the meeting. • He was married with two dependent children. • He was in good health. • He was an accountant partner with a big firm employed on a self-employed basis. • His annual salary was around £300,000, giving him a net monthly income of around £15,000. • It was recorded that Mr N didn’t want a detailed analysis of his monthly expenditure, but it was around £6,000, thereby providing him with a net disposable income of around £9,000. • He held around £90,000 in available emergency funds. • He didn’t expect his financial circumstances to change in the foreseeable future – about five years. • He held total liabilities of £200,000 • He owned his own home with an outstanding capital repayment mortgage with an eighteen-year term remaining. • He was comfortable paying his mortgage from his income so didn’t want to use his capital for this. • He had adequate life and illness protection in place. • He held five pensions that he wasn’t making any contributions to – four were Additional Voluntary Contribution (“AVC”) plans and one was a Group Pension Plan. • It was also recorded that Mr N was only now paying attention to his pensions and

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wanted to review his existing arrangements and consider future contributions and pension funding to take advantage of the tax breaks. • He also wanted to build a good working and advisory relationship with someone he could trust to be proactive to address his changing and complex needs. • Mr N was described as an experienced investor through his pension funds but had spent little time reviewing or considering the most appropriate investment areas and moving forward he wanted proactive fund management. • In assessing his attitude to risk Mr N agreed he wanted to take a medium risk approach. Following this a Suitability Report was sent to Mr N dated 6 February 2015 setting out details of the discussion that had taken place at the meeting as well as the recommended advice. To summarise the letter stated that: • The adviser had provided Mr N with a Key Facts document about SJP’s services and costs. This described, amongst other things, the products offered, the service provided and the Terms of Business. • The Key Feature booklet and illustrations for the plan that was recommended had been discussed at their meeting and had been left with Mr N for his information and were to be read in conjunction with the suitability letter. • It was strongly recommended that a review of Mr N’s circumstances should be carried out regularly and the adviser would write to Mr N each year on the anniversary of his plan to provide him with an annual statement and to arrange a time for the review. • He had an intended retirement age of 60 and planned to fully retire at age 65. • He wanted to maximize his pension capital and tax efficient income in retirement but had no specific requirement for capital or income. • He wanted to consolidate all of his pensions with one provider for simplicity whilst also contributing on a regular basis to his pension. • At that time his main scheme benefits under his firm’s pension scheme couldn’t be transferred but he wanted to consolidate the others in order to benefit from the SJP Distinctive Investment Approach. • He wanted to have access and the ability to build a good working relationship with an adviser who could provide face-to-face advice together with regular reviews of his pension and other financial matters. • Higher charges were not a concern for Mr N in order to access the SJP approach. • Mr N wanted an investment strategy that would be reviewed and monitored regularly as Mr N had little direct investment experience. • Mr N’s main concern was to ensure he was invested in the right funds that met his needs now and by the time he reached his selected retriement age. The recommendation the adviser made was to transfer his existing four AVC pensions totalling around £30,000 to the SJP RA. As above, the main scheme he held of around £160,000 was not to be transferred at that stage because he had protected tax free cash under the plan which would be lost on transfer. The adviser’s rationale for this recommendation was: • Mr N wanted to consolidate his pension plans with one wealth adviser who could provide regular reviews and updates. • He wanted his funds actively managed by a wealth adviser for the potential for future growth and the approach used by SJP provided this. • He wanted the opportunity to develop a long-term relationship with a wealth adviser who could provide him with regular reviews he wanted. • He would receive help and guidance to assist him in understanding the funds

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invested in. • It would provide him with the opportunity to discuss the most tax efficient way to invest into pensions now and in the future. The letter also detailed the costs of replacing Mr N’s existing plans. There were no transfer or exit charges on the three of the initial plans being transferred at the time and one had a market value adjuster applied to it – the costs of which were set out clearly. The impact of charges on his benefits were also explained for each of the plans being transferred stating by how much each plan had to grow in order to match the existing plans. The total annualised additional costs of transferring the four plans to SJP was, after applying special terms, 0.99% per annum or in other words the RA would have to grow by £301 more in the first year than his existing plans in total. The letter also detailed how and why Mr N’s attitude to risk was set at medium – taking account of his age at the time and when he wanted to retire, his capacity for loss and his affordability status. And having discussed the various different types of assets that were available, and the risks associated with them Mr N confirmed he was willing to take a medium level of risk with his investments. This meant he wanted his capital to keep pace with inflation and was investing for at least five years. He was also comfortable with most of his capital being invested in equities and property, some of it overseas. He understood there could be significant falls in the values of his investments but accepting risks gave him the potential to achieve better longer-term returns. It was also recorded that the adviser made Mr N aware that under his existing plans he was invested in With Profits Funds which were more cautious in nature than his stated attitude to risk. But it also recorded that Mr N had confirmed that With Profits Funds were not geared to his need for capital growth. The letters also confirmed that the recommendation was to invest in the Managed Funds Portfolio because it was consistent with his medium attitude to risk; the Manage Funds Portfolio aimed to provide capital growth for investments of at least five years diversified across managers with different investment styles and that having discuss the asset diversity and different styles of each manager within the Managed Portfolio compared to other portfolios that were available Mr N felt this one was most suited to his needs at the time. Mr N was also provided with an illustration document which confirmed that SJP would provide him with ongoing advice to review his investment each year to ensure it remained suitable for him and that the fee for this would be 0.25% of his investment each year. The fact find and suitability letter both strongly recommended that regular/annual reviews should be carried out. In November 2016 SJP gave Mr N further advice in respect of his remaining pension - a workplace pension, the provider of which I will refer to as Firm S. Due to the business connections between Firm S and Mr N’s firm he was unable to hold more than 10% of his assets with Firm S so he was advised by SJP to move his funds into three non firm S funds. The amount transferred to the SJP RA was around £180,000 and after special terms were applied the plan would need to outperform his ceding scheme provider by 0.74% per annum. The plan with Firm S also had protected tax-free cash and this was preserved by completing the transfer as a block transfer. As before he was advised to invest in the Managed Fund portfolio which was deemed to be consistent with his attitude to risk. In July 2023 Mr N complained to SJP via his representatives. SJP didn’t uphold the complaint as it was satisfied that the advice to switch met Mr N’s financial needs and objectives at the time. It also said that any complaint about reviews that were missed more

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than six years before the complaint had been made were out of time and so couldn’t be considered under the Dispute Resolution (“DISP”) Rules, set out in the Financial Conduct Authority’s (“FCA”) Handbook – rules which this Service must follow. When the complaint was brought to this Service it was assessed by one of our investigators. He felt that given Mr N’s then current arrangements and his plans and objectives as communicated to SJP at the time the advice he was given was largely suitable for him and that while he was subject to increased costs and charges this was understandable in light of Mr N’s needs for his retirement planning. In terms of the OACs part of the complaint the investigator agreed with SJP that any missed reviews that occurred more than six years before Mr N raised his complaint could not be considered by this Service as they had been brought outside of the required timescales set out in the DISP Rules. So he only considered any missed reviews from July 2017 onwards. In relation to these he initially found no evidence that any reviews for the years 2017, 2018, 2019, 2020, 2021,2022 and 2023 had taken place and so suggested that SJP refund the OACs that Mr N had paid for these dates. However, following the view SJP provided evidence that the reviews for 2017, 2018, 2019, 2021, 2022 and 2023 had in fact taken place and given the evidence SJP provided the investigator then amended his outcome for the OACs to be that only the charge for the missed 2020 review be refunded to Mr N. Through his representative Mr N didn’t agree with the investigators assessment and provided the following comments: • Mr N felt that the fact that the adviser was a tied agent and so the fund selections available were limited were not discussed clearly during their discussions. Mr N said he placed significant trust in his adviser due to their personal relationship and feels this critical information was understated. • Mr N was assured that the increased fees of 0.99% and 0.74% respectively would be justified through active management of his portfolio. However, he became aware within the last three years that his investments were not being actively managed as evidenced by poor fund performance. • Mr N’s ability to identify and act on his dissatisfaction was severely affected by his wife’s diagnosis of a serious illness some years ago. And despite being aware of this SJP failed to provide the agreed annual reviews or make any meaningful contact which has further compounded Mr N’s loss of trust in SJP. • Mr N didn’t feel the proposed reimbursement of the fees was adequate and stated that he wanted the entirety of the fees charged by SJP to be reimbursed due to its systematic failure to deliver the promised active management and ongoing advice charges. • Mr N believed that the funds he transferred to SJP had significantly underperformed compared to their previous positions. And so wasn’t willing to accept the current proposed settlement terms. The investigator considered the comments provided by Mr N but wasn’t prepared to change his initial outcome. So as no agreement could be reached the complaint has been passed to me to decide. What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint.

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I’d like to reassure both parties that I’ve carefully considered all of the arguments made and the evidence provided. If I don’t comment on or refer to everything that has been said this isn’t meant as a discourtesy or because I haven’t thought about it. Rather it is because my decision addresses what I think are the key points in deciding the complaint, bearing in mind our role as an informal dispute resolution service and my remit of deciding what a fair and reasonable outcome is. I’ve taken into account relevant law and regulations, regulator’s rules, guidance and standards and codes of practice, and what I consider to have been good industry practice at the time. And where the evidence is incomplete, inconclusive or contradictory, I reach my conclusions on the balance of probabilities – that is, what I think is more likely than not to have happened based on the available evidence and the wider surrounding circumstances. The main issues in Mr N’s complaint are the suitability of the advice he has received from SJP and the OACs that he has paid and whether he did in fact have any review to justify those charges. For ease of reading, I’ll look at these issues separately. Suitability of the advice to switch to SJP given to Mr N in 2015 It’s first important to point out that my role is not to decide what the best or most perfect advice would have been for Mr N, or any consumer. My role is to look at the advice and the recommendations given and decide whether, from the information in front of me, what was recommended was in line with the consumer’s needs and objectives at the time taking account of his personal and financial circumstances. So where the CMC has said that there were many other options available to Mr N at the time of the advice rather than switching his pension, whilst that may be true, I can only look at the advice Mr N accepted and assess the suitability of that – I cannot state or decide what else Mr N should or could have done. As a regulated firm, SJP had many rules and principles that it needed to adhere to when providing advice to Mr N, namely the FCA handbook under the Conduct of Business Sourcebook (COBS) and Principles for Businesses (PRIN), as they were at the time of the advice. Furthermore, given the complaint concerns a switch of a pension I must also have in mind the relevant guidance provided by the FCA and its predecessor, the Financial Service Authority (“FCA”) and of particular relevance for this complaint is the report the FSA published in 2008 on the quality of advice on pension switching. This report identified four main areas where they considered advice to be unsuitable: • The switch involved extra product costs without good reason. • The fund(s) recommended were not suitable for the customer’s attitude to risk and personal circumstances. • The adviser failed to explain the need for or put in place ongoing reviews when these are necessary. • The switch involved loss of benefits from the ceding scheme without good reason. As well as this, in deciding whether the advice was suitable I have considered what obligations SJP had when providing that advice and in conducting its suitability exercise. In doing this I expect to see that a business has obtained necessary information regarding the consumers’ knowledge and experience in investing, their financial situation and any investment objectives – essentially enough information to understand the most important facts of the consumer so that the recommendation meets the consumer’s investment

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objectives. These considerations include their attitude to risk, the purpose of investing and how long they want to invest for; whether the consumer can financially withstand the investment risk; any potential future changes to their circumstances (financial and personal); the extent of their regular income, assets, cash holdings, investments, property liabilities and regular financial commitments. The advice Mr N received was to switch his pensions held with different firms to SJP. There is nothing in the information to suggest that these pensions were no longer suitable for him so clearly the advice warrants a closer look. However, as already set out earlier in this decision the point of sale documentation recorded that Mr N had definite reasons for wanting to switch from his then existing pension providers so I am satisfied that there was a clear rationale for transferring from his existing providers at the time and that it seems it was he who had initiated the process. The information I have tells me that Mr N was seeking advice about his retirement planning. As a partner in his firm he didn’t receive employee benefits in the form of contributory pension and his retirement provisions were not significant when compared to his salary and wider savings. And as already described above it seems Mr N had accepted that retirement planning had not been at the forefront of his mind but he had felt the time had come to focus on it more. It therefore follows that given this, as well as the fact he had five pensions in place at the time, it doesn’t seem unreasonable to me that Mr N wanted to simplify his pension arrangements into a single plan which would enable him to work closely with an adviser going forward. So I am satisfied that there was a legitimate need for Mr N seeking the advice from SJP and that he had specific needs and objectives that he wanted met. Looking at the first advice in 2015, the switching of Mr N’s AVCs, he was assessed as being a medium risked investor. As above it was recorded in the paperwork from the time that he didn’t have investment experience through any other means but his pension so he wasn’t a sophisticated investor. However, he was in a strong financial position, had a significant annual salary and a significant level of disposable monthly income. He also held a significant cash reserve, was in his forties - a long time before his desired retirement date and had a need for growth in his pensions. Therefore, being assessed as a medium risked investor doesn’t, on the whole, seem unreasonable to me. In addition to this, three of Mr N’s AVCs were invested in With Profits Funds. Not much information has been provided about these funds but I know that generally With Profits Funds are geared towards investors with a modest appetite for risk. So in Mr N’s case, given his appetite and capacity for risk was medium, suitably so, having these AVCs in the With Profit Funds doesn’t seem to match his stated needs and objectives at the time of the advice. Staying in these funds would have limited the potential the plans could grow thereby acting directly against his objectives. With regards to the switch of the plan held with Firm S in 2016, while this wasn’t invested in a With Profits Fund, and so had more potential to grow it seems that Mr N had to transfer the plan due to Firm S’ connection with Mr N’s firm. If he didn’t switch this pension his money would have been reinvested into default funds which were very unlikely to meet his stated aims and objectives at the time. Furthermore, given Mr N’s need to simplify his pension arrangements and have more of a relationship with an adviser it seems likely that this pension was always going to be transferred once the RA had been set up.

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In terms of costs, I agree that the costs under the RA were more than the costs of Mr N’s then existing arrangements. However, I think it was very unlikely that Mr N’s objectives recorded at the time were ever going to be met had he stayed with his existing providers. So switching his pensions was almost inevitable if he wanted to make more growth on them than he had in the past. Also, part of the increase in costs can be attributed to the cost of the ongoing advice (0.25% of the 0.99% increase). Mr N didn’t have this service under his existing arrangements, but I am satisfied that he wanted it as it was in line with his needs and objectives he expressed to the adviser. In terms of the outperformance needed by his RA compared to his existing arrangements, given Mr N was increasing his exposure to risk to increase his potential for growth I don’t think against this context the requirement for the growth of the new plan was excessive or unrealistic. Looking at the funds which Mr N was recommended to invest in for all of his switched pensions, I am satisfied that they matched his medium attitude to risk. He was recommended to invest in a Managed Funds Portfolio which overall appears to have allowed for the potential of capital growth over at least five years which met with Mr N’s objective of planning for his retirement. Within the portfolio the investments were diversified across fund managers with different investment styles allowing for diversification and the portfolio invested in global equities including emerging economies balanced out by also a proportion being invested in bonds. So overall I am satisfied this was suitable for Mr N given his stated aims and objectives for his retirement planning that was stated at the time. The OACs The Financial Ombudsman Service isn’t free to consider every complaint that’s brought to us. We are governed by rules set by the FCA’s Handbook, the DISP Rules as mentioned above. They set out the complaints that we can (and can’t) consider and I have to strictly apply these rules. The specific DISP rule relevant for this complaint is DISP 2.8.2 R which sets out the following: “The Ombudsman cannot consider a complaint if the complainant refers it to the Financial Ombudsman Service: …….. (2) More than: (a) Six years after the event complained of; or (if later) (b) Three years from the date on which the complainant became aware (or ought reasonably to have become aware) that he had cause for complaint; Unless the complainant referred the complaint to the respondent or to the Ombudsman within that period and had written acknowledgement or some other record of the complaint being received; Unless: (3) in the view of the ombudsman, the failure to comply with the time limits in DISP 2.8.2 R or DISP 2.8.7 R was as a result of exceptional circumstances; ……. The rules don’t say that Mr N needs to know exactly what’s gone wrong to bring a complaint – only that he needs to have a reasonable awareness something might have gone wrong.

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If a complaint is brought outside of the time limits set out in the rules, we’d only be able to consider it if SJP has consented – which it hasn’t – or if the complaint was brought late due to exceptional circumstances. The FCA gives an example of exceptional circumstances as being incapacitated. Mr N made his complaint on 18 July 2023 so as per the rule above, as each missed review is its own ‘event’, with the OACs being charged in advance, any complaint about reviews that were missed more than six years before this date is potentially out of time. Given Mr N transferred his first pension in February 2015 and the reviews should have been annually this means that the review from 2016 is the one in question. 2016 is clearly more than six years ago so I must consider the second part of the rule above which is whether Mr N was aware, or ought reasonably should have been aware, that he had cause for complaint more than three years before the date he did in fact make the complaint in July 2023 Having looked at the documentation that was provided to Mr N in 2015, which includes the suitability report and the illustration document, as noted earlier in this decision it is clear that SJP intended to review Mr N’s RA regularly. The information around this point is clear and easy to understand so I am satisfied that this would have been known to Mr N at the time he agreed to act upon the advice provided to him. Therefore, it follows that I think he was aware, or at the very least should have been aware that he should have had a review in 2016 and the fact he didn’t ought to have reasonably given him cause for the complaint at the time. I appreciate that Mr N did meet with the adviser towards the end of 2016 when he made his second transfer however the information provided from 2016 doesn’t refer to reviewing the pension switch that took place in 2015. So I can only assume that a review didn’t take place. Therefore, I am of the view that Mr N should have known about the missed review from 2016 when it didn’t take place and for three years thereafter during which he should have raised his complaint. However, because he didn’t raise his complaint about the 2016 review until seven years later he has brought his complaint about this particular review too late. So the complaint about missed reviews that occurred before July 2017 cannot be considered by this Service due to it being brought outside of the required timescales. The rules say I can consider a complaint that’s been made too late, if I’m satisfied the failure to comply with the time limits is due to exceptional circumstances. But I’ve seen nothing to suggest this is the case here. And while Mr N has cited his wife’s illness as a reason why he didn’t bring his complaint earlier this doesn’t meet the requirements of an exceptional circumstance. I don’t doubt that this would have been a very difficult time for him, but it seems Mr N wasn’t incapacitated as he was able to continue with his daily life and activities. So in line with the rules above, which I must follow, I see no reason why he couldn’t bring his complaint within the required timescale. In terms of the reviews from July 2017 onwards, as detailed earlier in this decision following the investigator’s view, SJP provided evidence of the reviews having taken place. These are letters written to Mr N following what appears to have been discussions about his plans. These letters refer to a previous conversation about Mr N’s pensions and that the focus of the discussion was on planning for retirement. It covered Mr N’s existing arrangements – the RA with SJP - and what his objectives were. Some of the letters over the years included any changes Mr N wanted to make to his plan or any contributions he wanted to make. And the letters summarised the details of these, if relevant, for that year. Some of the letters also reviewed Mr N’s attitude to risk and some just stated that no changes were to be made for that year. I have also seen that a confidential financial review was completed each year around the same time the review letters were completed. So, in light of this I am satisfied that Mr N had the required reviews annually at the correct times for the years 2017, 2018,

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2019, 2021, 2022 and 2023. And I am unsure given the level of evidence provided why Mr N remains of the view that he didn’t receive the ongoing adviser service that he was paying for. There is not, however, any information that pertains to the review that should have taken place in 2020 therefore I can only assume that this didn’t happen given the level of details provided for the reviews in the other years. Therefore, as the 2020 review didn’t take place in line with what was agreed with Mr N SJP must refund the cost of that review because in this aspect Mr N didn’t receive the service he had paid for. Other considerations While Mr N has said that the tied status of the adviser was underplayed, obviously, I can’t know what was discussed when Mr N met with Mr B or what emphasis was put on details. However, I can see that the paperwork provided to Mr N at the time of the advice did explain the adviser’s tied status sufficiently, so I am satisfied that this gave Mr N the information he required in this respect. I know Mr N has said that he was looking for active management of his portfolio, however active management was never discussed, or at least it wasn’t noted in the documentation from the time of the sale. So I don’t think Mr N was told his portfolio would be actively managed in the true sense of the word. Instead, the funds within the portfolio Mr N invested in were actively managed and this was set out clearly in the suitability letter sent to Mr N in February 2015. I appreciate Mr N is ultimately unhappy with the performance of his RA and feels it hasn’t performed to his expectations. But this doesn’t automatically mean that the advice he was given was unsuitable. And overall, for the reasons set out above I am satisfied that the advice given to Mr N in 2015 and 2016 was suitable for him given his circumstances, needs and objectives at the time. The fact that Mr N’s investments have not performed to his expectations doesn’t mean he was given unsuitable advice. I am also satisfied that SJP did carry out reviews of Mr N’s RA for the years 2017, 2018, 2019, 2021, 2022 and 2023. The evidence provided confirms this quite strongly. Therefore, in terms of the OACs the only year that SJP must refund to Mr N is for the missed review in 2020 where no evidence of a review for that year has been provided. Putting things right As I’ve explained, I think SJP failed to provide the agreed ongoing service to Mr N for the year 2020. So, I think it would be fair and reasonable that the fees Mr N paid for the ongoing adviser service he didn’t receive be refunded. Fair compensation In assessing what would be fair compensation, my aim is to put Mr N as close as possible to the position he would probably now be in if he hadn’t paid ongoing adviser charges for 2020. SJP should repay the adviser’s fees, adjusted for growth had the fees remained in the existing investment funds, from the date the fees were paid to the date of settlement. • SJP should pay into Mr N’s pension plan, to increase its value by the amount of the compensation and any interest. The payment should allow for the effect of charges and any available tax relief. SJP shouldn’t pay the compensation into the pension plan if it would conflict with any existing protection or allowance.

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• If SJP is unable to pay the compensation into his pension plan, it should pay that amount direct to him. But had it been possible to pay into the plan, it would have provided a taxable income. Therefore, the compensation should be reduced to notionally allow for any income tax that would otherwise have been paid. This is an adjustment to ensure the compensation is a fair amount – it isn’t a payment of tax to HMRC, so Mr N won’t be able to reclaim any of the reduction after compensation is paid. • The notional allowance should be calculated using Mr N’s actual or expected marginal rate of tax at his selected retirement age. • Mr N has confirmed he is likely to be a basic rate taxpayer at the selected retirement age, so the reduction would equal 20%. However, if he would have been able to take a tax-free lump sum, the reduction should be applied to 75% of the compensation, resulting in an overall reduction of 15%. SJP must provide the details of the calculation to Mr N in a clear, simple format. My final decision For the reasons above, my final decision is that I uphold this complaint in part. I direct St. James’s Place Wealth Management Plc to put things right in line with the approach above. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr N to accept or reject my decision before 20 August 2025. Ayshea Khan Ombudsman

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