St. James's Place Wealth Management Plc · DRN-6261025

The complaint Mrs H complains about the suitability of the advice St. James's Place Wealth Management Plc (SJP) gave her on investing the proceeds of a Pension Sharing Order (PSO), including the charges applicable. She also says that despite ongoing charges having been deducted, not all the annual reviews have taken place. And as a result of SJP changing its adviser and her not having brought new money to SJP herself, she should be allowed to leave without penalty. Mrs H is represented by her ex-husband. For ease I’ll refer to the representative’s comments as her own. What happened In December 2013, Mrs H’s ex-husband met with an SJP adviser. The resulting recommendation was that both Mr and Mrs H invest in a SJP stocks and shares ISA aligned to a medium attitude to risk and invested in its Managed Funds portfolio. Mr H also had a personal pension plan with SJP. Mrs H received further advice in March 2017 to invest more into the ISA. The suitability report addressed to her on 29 March 2017 noted that her circumstances, objectives and attitude to risk hadn't changed since the 2013 recommendation. The total invested into the ISA was £27,071. Mr and Mrs H were divorcing in 2022 and remaining on good terms. In August and September 2022, as part of their divorce settlement, Mrs H and SJP discussed investing the PSO she was awarded from Mr H’s SJP policy. She was due a pension credit of 88.6% of Mr H’s SJP plan, worth about £438,000. SJP recorded her circumstances and objectives: • Aged 47 and in good health • Houseperson and not working • Four children aged between 15 and 19: their schooling and day to day expenses would continue to be funded by Mr H until age 21 • Would receive maintenance from Mr H of £66,000pa for at least five years (depending on when he stopped working), which would be sufficient for all living costs, plus 25% of his company bonus (a figure wasn’t given) • Marital home was on the market and Mrs H would need to buy her own, but would likely leave £250,000 in surplus cash • Mr and Mrs H would receive about £3m each (including properties) in the settlement, with no debts • As it stood, it was unlikely she would need to return to work, but intended to draw pension benefits at 65 • Attitude to risk of ‘medium’ based on her having ‘some investment experience’ and having invested her ISA in a medium risk investment strategy since 2013 Her noted objectives were to invest for retirement and utilise the SJP Investment Management Approach which she had been satisfied with for her ISA. The adviser noted that Mrs H liked the idea of having ‘continued ongoing advice and active management’.

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The adviser sent her a suitability report on 18 August 2022 in which he committed to arranging regular reviews: “A key element of financial planning is conducting regular reviews of your circumstances to ensure the course of action taken today remains appropriate, as it is likely your objectives and circumstances will change over time. As part of my ongoing service I will arrange regular reviews whereby we can revisit and update your circumstances. We will ensure that the plans you have in place remain appropriate to your needs and are performing in line with your expectations both in terms of investment performance and service level.” The suitability report didn’t set out any of the charges, which were covered separately in SJP’s illustration and Key Features Document. These showed that the product charges would reduce future growth by 1.1%pa, and incorporating the initial (4.5%) and ongoing (0.5%pa) advice charges would increase this to 2%pa. Within this the anticipated cost of managing the investments was 0.46%pa. The initial and ongoing advice charges were also expressed in monetary form as £19,738 and £2,195 (in year one) respectively. The initial product and advice charge combined was 6%, and the cost of this would be spread over the first six years. This meant that there was an early withdrawal charge (EWC) on a sliding scale if funds were transferred elsewhere in those first six years. The suitability report also explained, “As funds are being moved into your St. James’s Place Retirement Account from external providers this element of the plan will be subject to an EWC”. Change of adviser Mrs H was then moved over to a different SJP adviser, who introduced herself by email on 19 January 2023. An initial phone call took place on 7 February. An annual review was then offered on 10 July and this took place on 11 September. During this call the adviser carried out an updated fact find. Although the standard form wasn’t used as many details hadn’t changed in the short time since the pension recommendation, it recorded that Mrs H was looking for a house for about £1.5-£1.7m, and had £190,000 in the bank with £1m to be passed to a different fund manager to SJP. Some of the cash was also to be invested into bonds with again a different company. The adviser also noted that Mrs H was getting “25% of [Mr H] bonus (£100k pa?) until [Mr H] retires. Bonus is split between cash and shares so shell only receive the value of the shares when they vest.” The adviser summarised this in an email to Mrs H the following day. She recommended Mrs H’s investments in the Managed Funds portfolio should be updated to the new ‘Polaris 3 portfolio’ which had been introduced at the end of 2022 “as a response to a changing market - especially with the quick drop in bonds”. The adviser explained the new portfolio allowed the fund managers to increase and decrease asset allocations by 20%, to help lower volatility and enhance performance. There would also be automatic quarterly rebalancing. It was still a medium risk portfolio but had a slightly higher weighting in shares, which the adviser considered remained appropriate for Mrs H’s term to retirement. The back tested performance over a 10-year period was showing as 115.3% overall. A similar recommendation was made for the ISA to go into 50% Polaris 2 and 50% Polaris 3 portfolios, as these funds were expected to be accessed sooner than the pension. Some comments were made about recommendations Mrs H was getting from another adviser, so I think this marks the point Mrs H was starting to question SJP’s advice. She was invited to confirm her agreement to make this switch via email – I’m not aware if this switch subsequently happened or not and it doesn’t feature in the complaint.

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After the adviser offered a further meeting on 9 January 2024, Mr H emailed SJP indicating that Mrs H was now looking to transfer her pension to the same fund manager that would be used for £1m of her other assets but had been surprised by the EWC. The complaint then followed on 18 March 2024. Mrs H’s complaint This asserted that it was incorrect for her to have been classified as an experienced investor in 2022, given that her 2013 ISA had been set up by her ex-husband on her behalf. She also complained that an EWC shouldn’t apply to her pension as it was funded from an existing SJP pension rather than (as the 2022 suitability report suggested) ‘external providers’. Alternatively, she should be able to leave without penalty because her original adviser no longer worked for SJP and she’d been moved to someone else. The complaint also referred to poor performance of the SJP investments and said not all ongoing advice reviews had been provided. In its response, SJP concluded the pension recommendation from 2022 had been suitable, and that it was entitled to apply EWCs should Mrs H transfer the policy away. It added ongoing advice wasn’t reliant upon Mrs H keeping the same adviser because her agreement was with SJP and not a specific adviser. Regarding the ongoing advice reviews, the part of her complaint about reviews prior to March 2018 was deemed to have been brought too late, but SJP accepted ongoing reviews hadn’t been provided later in 2018, 2019, 2020, 2021 or 2024. It offered to refund the relevant charges, adding simple interest at 8%pa and a further £150 for the distress and inconvenience caused. Our Investigator agreed with SJP on the suitability aspects, and that only the complaint about the missed reviews which were within six years of the date of her complaint in March 2024 was brought in time. However he disagreed with SJP that Mrs H received a review of her ISA in 2022 as part of the sale of the pension. He also didn’t consider that the fund switches in 2023 alone were evidence of an adequate review of both the pension and ISA. He therefore considered SJP should include the charges paid in 2022 (for the ISA) and 2023 (for the ISA and pension) in its refund. Mrs H didn’t agree with the Investigator. She made no further comments about the time- barred charges refunds, either in response to the Investigator’s view or my Provisional Decision issued on 16 March 2026 where I explained why I agreed with the Investigator. So I won’t be discussing that aspect in this decision. Her other points were: - Her lack of experience of these matters would mean she would never have known to question the EWC at the point of sale. She signed the contract with an EWC based on two errors by SJP: one was that the funds were coming from an external provider and the other that the [named] adviser, not SJP, would provide ongoing advice. - Had she been presented with the correct terms, she would have sought advice from her representative and been advised against proceeding because of the EWC. So she should now be allowed to transfer out without penalty. - The offer of £150 for distress and inconvenience was dismissive considering the scale and many years duration of the issues. They have spent several weeks of time dealing with SJP on this matter. And it’s caused significant stress. SJP also didn’t agree with the Investigator. In summary, it said:

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- It’s reasonable to assume that when a meeting takes place and SJP updates its ‘fact find’ with a new ISA value, discussions would have encompassed the ISA even if they weren’t referred to in the recommendation letter. The 2022 suitability letter also referred to Mrs H being happy with the ISA performance. - A fund switch has been previously accepted by this service as evidence that a review was in fact undertaken. A switch would have required full discussion with the client. Mrs H added in response that she has little understanding of what investments were available or how to gauge their performance. So she didn’t consider it was for the adviser to rely on a comment that she was happy with the performance as being a review. As agreement couldn’t be reached, the matter was referred to me and I issued a provisional decision on 16 March 2026, the relevant parts of which I repeat below. Provisional decision of 16 March 2026 Suitability of the Pension Sharing Order investment Mrs H says that SJP’s adviser gave her the impression this was the simplest way for the PSO to be implemented. But she considers she wasn’t adequately made aware of the costs, and had she been she would have appointed a different pension provider. Mrs H was granted a share of her ex-husband’s pension but that sum had to be invested in a new pension arrangement. So it wasn’t a pension switch, where an individual transfers their existing pension to a new provider but has the option of leaving it where it was. In common with a pension switch Mrs H would have been able to consider alternatives to what SJP was offering, and from how she’s phrased her complaint I think Mrs H did know this at the time. It’s also important for me to note that SJP’s adviser could only recommend SJP products: they were tied to that firm. This was disclosed in the ‘Key Facts about our Services and Costs’ documents provided at the point of sale. So whilst it was open to Mrs H to consider alternatives to the SJP pension, the adviser was under no obligation to detail those to her, with two exceptions in my view: - Any existing employer’s scheme: as a result of economies of scale it’s generally understood that making contributions (or a pension credit under a PSO, if this is possible) to an employer’s pension arrangement may be cheaper than under a private arrangement – and it’s reasonable to expect them to point the client towards the employer to make further enquiries. I can see that the adviser did check this but having found that Mrs H wasn’t working (and it appears didn’t have other pension arrangements), this possibility couldn’t be pursued further. - A stakeholder pension scheme: these were a lower-cost form of pension provision introduced in 2001 under which the charges couldn’t be higher than 1.5% for the first ten years. I can see that the adviser did compare the SJP proposal with a stakeholder pension but explained that the cost of the ongoing reviews couldn’t be financed through the latter’s simpler charging structure. So Mrs H would have to fund these less tax-efficiently from her own pocket rather than the pension funds before tax was incurred. Other than these two aspects, due to the adviser’s tied status he wasn’t expected to set out how SJP’s costs compared to others in the market. But he was expected to explain what those costs were and provide suitable advice. As I’ve set out above, the total charges came to 2%pa – 0.5%pa more than a stakeholder pension over the first ten years. So I need to consider what Mrs H was getting in return for these costs and whether it amounted to

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suitable advice. Firstly, the sum Mrs H was investing was significant – I would say more than the typical sums at which the stakeholder pension market is targeted. These polices have a more basic range of funds available which allows them to be offered more cheaply. Although access to some external fund managers may be offered by a stakeholder pension, these are limited. I also think it’s plausible that someone investing as much as Mrs H and who (as she argues) wasn’t experienced in making investments, would benefit from the assistance of an adviser in selecting and monitoring the funds she chose on an ongoing basis. That would come at an additional cost which couldn’t be accommodated with the stakeholder pension charging structure, as the adviser highlighted. The SJP plan didn’t offer a substantial range of fund choices either. But unlike a stakeholder pension these were ready-made portfolios that sub-invested with other external fund managers which could be ‘hired and fired’ by SJP subject to their performance. As a result they gave Mrs H access to a potentially wider range of assets and investment styles. I don’t think that was inappropriate for the amount she was investing, and with her lack of experience and change in her circumstances due to the divorce, I think she stood to benefit from the ability to review matters regularly with the adviser. SJP reviewed Mrs H’s attitude to risk and determined that it was ‘medium’. Given that Mrs H was receiving a substantial maintenance income and was receiving a significant amount of pension funds and other assets from the divorce which were expected to be invested over the long term, I don’t think that was an unreasonable conclusion. It remained consistent with the attitude to risk she had taken with her ISA investments. Even though I accept Mrs H’s point that one previous ISA investment didn’t make her very experienced, that doesn’t mean she wasn’t prepared to take a medium level of risk with a significant part of her pension invested in shares. Her attitude to risk led to a choice between three broadly medium risk portfolios. The adviser explained the benefits of diversification in the mix of fund managers (and their approaches) employed in the Managed Funds Portfolio. I understand Mrs H’s concern that references to her being satisfied with the performance of that portfolio for her ISA were unlikely to come from a well-informed position. Nevertheless, given that the adviser was tied to recommending SJP funds I haven’t found grounds to conclude that this was an unsuitable recommendation. I’m therefore satisfied that Mrs H was given suitable advice on investing the PSO. Although she might have been able to get another personal pension (not just a stakeholder plan), including an annual review service, at a slightly lower overall cost, that would have been for her to investigate before accepting the adviser’s recommendations. I don’t think it would have been wrong for the adviser to give the impression that the PSO could be implemented more easily with SJP - but that didn’t amount to a statement that SJP was the most suitable place in the whole of the market for her to make the investment. Due to the size of Mrs H’s funds the initial and ongoing advice charges, as a percentage of the fund, were significant. But I note these were disclosed on the illustration in pounds and pence and would have acted as a powerful indication to Mrs H that she could shop around if the wasn’t happy with what was being offered. I also think the EWC was adequately disclosed in the illustration. The adviser’s only error was in repeating what I expect was standard wording used in suitability letters for pension switches that transfers from external providers would attract the EWC. The inference being that an internal switch within SJP would not. But despite saying this he was confirming that the EWC would apply in Mrs H’s case:

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“The St. James's Place Retirement Account which I have recommended is subject to Early Withdrawal Charges. When benefits are taken from the plan drawings of up to 7.50% of the value of the investment on the day after the investment was made can be taken without any charge being made… If you choose to withdraw funds in excess of [this] an Early Withdrawal Charge (EWC) will apply to the excess.” The illustration Mrs H was given, saying at the top it was based on a “transfer from SJP”, also said that the EWC would apply. That was essentially because a part of Mr H’s pension was being transferred into Mrs H’s, so it represented business for Mr H leaving SJP and new business for Mrs H, with each client requiring separate advice. I consider there was enough disclosure here for Mrs H to be aware that, notwithstanding the misplaced reference to external transfers, an EWC would apply. If she wasn’t happy with this prospect this was something she could have raised with SJP herself at the time. From what I understand it’s unlikely in any event that SJP would have been willing to remove this requirement due to the costs it would incur in giving this advice, which are effectively recovered from the ongoing charges (or the EWC if the policy ends early). As a result I’m not upholding Mrs H’s complaint about the suitability of the 2022 pension advice. I appreciate that the annual reviews which were sold as a key part of the reason for taking up the recommendation, and for it being suitable for Mrs H, weren’t subsequently provided. So that might call into question the adviser’s willingness to offer, or Mrs H’s willingness to have, the reviews. However I’m drawn to the point that Mrs H didn’t have an existing provider for this pension before she met with SJP – the funds had to be moved out of her ex-husband’s policy. The recommendation on paper looked to be a suitable way of meeting Mrs H’s needs and objectives. Where reviews didn’t take place I’m not in a position, without hindsight, to identify what changes to the funds might have been made – particularly as Mrs H’s long-term objectives for using the pension plan don’t seem to have materially changed. So I think there is an adequate remedy of the failure to provide reviews in the refunds SJP has agreed to provide Mrs H. […] The suitability of Mrs H’s ISA was reviewed as part of the March 2017 topup. And as SJP accepts it should provide a refund of the fees charged for reviews from March 2018 to 2024 (with the exception of 2022 and 2023), it is those two disputed reviews that I now need to consider. The missed reviews in 2022 and 2023 The evidence surrounding the 2022 pension sale doesn’t show that Mrs H’s ISA received a material review. Comments in the suitability report that Mrs H had been pleased with the level of performance don’t convey any view from the adviser on whether the investments still matched Mrs H’s attitude and objectives. Nor would evidence that the adviser updated the value of the policy on the fact find, without further substantive work being carried out. In addition, I don’t find that the adviser’s recommendation of the same Managed Funds approach for use in the pension constituted an endorsement that it was still appropriate for the ISA. The justification for that seems to have been taken from Mrs H directly, and I have sympathy for her point that it’s unlikely she would be able to comment from a particularly informed position on what ‘good’ performance should have looked like. What I would have expected to see in a review was the adviser’s insight on this point.

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The lack of a full review in 2022 also seems to be symptomatic of Mrs H’s ongoing relationship (or lack thereof) with SJP’s advisers prior to the most recent one she had in 2023. There’s then more evidence of an effort to arrange introductory and review meetings after the new adviser took over. I’ve set this out in the background above. As the phone discussion later that year took place about a year after Mrs H’s pension had been set up, and involved a material discussion between Mrs H and SJP, I’m satisfied that this constituted a proper review of both the pension and the ISA. In my view SJP and the Investigator were focused too much on the outcome of the review – a recommendation to switch funds – rather than what materially happened up to that point. I’m not bound by an Investigator’s view on the different case SJP has cited and nor do I think it is necessary to take a position that a fund switch will always constitute a review. But in this case I think it did because there’s evidence of the adviser doing a further fact-find beforehand, clarifying Mrs H’s asset and income position as well as the change in the markets (particularly bond markets) prompting the introduction of the Polaris funds. I’m not looking here at whether switching to the Polaris funds was, or would have been, the right thing to do, but there clearly was a difference between the existing funds Mrs H was in and the Polaris funds, which the adviser explained at the time irrespective of her attitude to risk remaining broadly the same. And what I’m looking at here is whether Mrs H received an adequate review in return for the charges she was paying. And for 2023, I’m satisfied that she did given the preparation, analysis and execution carried out by the adviser. Notably, it also wasn’t a one size fits all approach with the ISA recommendation involving a different fund split to the pension. Departure of previous adviser giving grounds to waive the EWC I’ve taken the same view as the Investigator on this point. Mrs H’s client agreement was with SJP and it set out that her adviser acted as an appointed representative of that firm. The illustration also set out charges that were payable to SJP rather than any particular adviser. Therefore, it’s not reasonable to take references to him as an individual as meaning that once he no longer provided the service personally, the separate provisions in the contract for an EWC no longer applied. The remedy for lack of provision of the ongoing review service is the refund of those charges which SJP already proposed, including the additional refund for the ISA charges funding the 2022 review which I now think she should also receive. Distress and inconvenience award Mrs H complains that SJP’s offer to pay her £150 is insufficient for the scale of its errors and the length of time they lasted. By scale I expect she may be referring in part to the value of her pension, but I’m not expecting SJP to do more than it’s offered here. I consider the first annual review due on the pension was carried out, and SJP has already included a refund of the next year’s annual review cost (2024) for the pension as well as the ISA in its offer. In terms of the ISA, the refund of all charges for missed reviews will be based on the size of that investment at the relevant time. 8%pa interest will then be added from the date the charges were collected, which provides Mrs H with meaningful compensation for the length of time these matters lasted. As a free dispute resolution service we don’t provide compensation for the time consumers spend bringing a complaint. SJP sent Mrs H an email on 13 May 2024 informing her of her right to refer the matter to this Service. It was required to do that even though it hadn’t completed its investigation, and she would have been able to come to us at any time from

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then onwards. Responses to the provisional decision SJP told us that it accepted the provisional decision, but Mrs H didn’t accept it in full. Her key points were: • She accepts the findings for compensation due to lack of reviews. • Recommendations of products weren’t being questioned in the complaint, but rather the legality of the contract, and the misclassification of Mrs H as an experienced investor. • In terms of the contract, for SJP to suggest that the standard wording in writing was not what was meant does not sit well with her, and she should be allowed to transfer without penalty. 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. I thank both parties for accepting my findings in relation to the lack of reviews. And I know this will come as a disappointment to Mrs H, but I haven’t found any reason to revise my findings about the early withdrawal charge. Firstly, I will briefly point out that where Mrs H suggests her complaint wasn’t intended to question the suitability of SJP’s recommendations, I considered that she had done that by calling into question its classification of her level of experience. This is one of the aspects of assessing suitability that the FCA expected SJP to follow in chapter 9 of its COBS handbook. So I have reviewed the suitability of the recommendation to take out the pension and my findings remain as set out above. On the early withdrawal charge, Mrs H is essentially saying that SJP can’t write down one thing (a statement implying that this charge applies to funds transferred in from external providers) - and then apply the charge on funds that were switched internally within SJP. However I’ve already addressed this point in my provisional decision. I had to look at the totality of what SJP said at the time of its recommendation. Yes, I agree that the wording SJP used was potentially misleading when taken in isolation. However I don’t consider this was done with the intention to deceive Mrs H or secure business that SJP wouldn’t otherwise have secured. It was standard wording which would cater for the overwhelming majority of situations: people who were switching internally from one SJP policy that they owned, to another, wouldn’t pay the early withdrawal charge – but people switching a non-SJP policy into SJP would. The difference is reflected in the likely much higher cost of providing the advice to analyse the benefits potentially being lost when transferring another provider’s policy. As I’ve acknowledged, Mrs H’s situation was more unusual. I don’t expect SJP deals with a large amount of PSO reinvestment business and, ideally, the wording it used should have been adapted better to this situation. Nevertheless, when looking at the totality of the explanations Mrs H received in writing it was clear – for the reasons I’ve already given above – that the early withdrawal charge would apply. It stands to reason that if it didn’t apply it wouldn’t have been mentioned in the illustration or suitability letter at all. And the reason it applied is understandable, given that the suitability of a product in Mrs H’s circumstances wouldn’t necessarily be the same as Mr H - and therefore giving this advice was not as simple as an internal switch between two policies for the same policyholder.

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I’ve therefore not revised any of my provisional conclusions on this complaint, and my provisional decision supplemented by the reasoning above becomes my Final Decision. Putting things right My aim in awarding fair compensation is to put Mrs H back into the position she would have been in if SJP had not charged for the advice reviews it didn’t carry out. SJP has already offered to refund the ongoing fees on Mrs H’s ISA in light of a lack of reviews for 2018, 2019, 2020, 2021 and 2024, and for the pension in 2024. Interest at 8%pa simple is then added to the relevant fees from the date they were due to the date of settlement. Whilst this may not precisely reflect the investment performance those fees would have earned if they remained in the pension or ISA, I consider it to be a reasonable approximation – and a reasonably pragmatic resolution to the complaint. I’m therefore satisfied SJP’s offer was fair and reasonable - with the exception of the cost of the missed 2022 review of the ISA, which I consider must also be included in the refund. Interest is to be recalculated up to the date of eventual settlement after Mrs H has accepted this decision. SJP must provide the details of its calculation to Mrs H in a clear, simple format. Income tax may be payable on any interest paid. If SJP considers that it’s required by HM Revenue & Customs to deduct income tax from that interest, it should tell Mrs H how much it’s taken off. It should also give Mrs H a tax deduction certificate in respect of interest if she asks for one, so she can reclaim the tax on interest from HM Revenue & Customs if appropriate. SJP must also pay Mrs H the £150 it has offered for the distress and inconvenience caused in its handling of the matter. My final decision I uphold this complaint in part and require St. James's Place Wealth Management Plc to calculated and pay Mrs H the compensation I’ve set out above. Under the rules of the Financial Ombudsman Service, I’m required to ask Mrs H to accept or reject my decision before 27 April 2026. Gideon Moore Ombudsman

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