St James’s Place persuaded Dad to move investments. Looking at damage limitation.

John905

My Dad was persuaded by his IFA, who now appears to be tied to SJP, to switch his investments from Aviva to their products. This was despite the Aviva products apparently performing well. Alarm bells started to ring when he mentioned he had switched, as I’d read a lot of negativity on here regarding SJP tactics, and sure enough, when I asked to have a look at his documents, it was SJP he had switched to. Part and parcel of this switch has involved SJP trousering a 2.5% fee, which they boast is discounted from their standard 4.5%. My Dad is in his 80’s, astute, albeit overly trusting, but finance is definitely not his thing. On speaking to him it is clear he had absolutely no idea what he was doing. The proposal to switch provider was totally initiated by his adviser. However, looking at the documents it states that my Dad requested a “better service from your provider”. Another quote is “You questioned whether we could possibly enhance the due diligence of the fund management process”. This could not be further from the truth. It is 100% copper bottomed nonsense. Amongst the paperwork I also came across a letter stating – “Thank you for confirming on your application that you have not received any financial advice in relation to this transaction. As this was your decision to proceed, it is important to remind you that, on this occasion, you have not benefitted from an assessment of suitability that would normally be conducted as part of the financial advice process. As a result of this you will be giving up some of your protections available from the Financial Ombudsman Service”. I found this very interesting, not least because yet another document states he has been charged a fee, running into thousands, supposedly for advice.

My dilemma is what will be the best course of action. I am thinking the way to go would be to submit a formal complaint to SJP, copying in his IFA (who no longer seems to be an IFA having become a SJP partner). I am also minded to get my Dad to arrange a face to face meeting where the two of us can give the adviser a proper grilling regarding his actions. Then, if it is not resolved to our satisfaction, taking the matter up with the Financial Ombudsmen.

I’m also not sure what would be a realistic resolution. Ideally I’d be wanting SJP to reimburse the 2.5% fee, then switch the funds out without any penalty. I’d also like an apology from his adviser, who from what I can see has effectively taken advantage of my Dad to line his own pockets. However, I also appreciate that that by failing to scrutinise the documents properly, and by signing whatever was put in front of him, my Dad could have unknowingly facilitated this "practice", leaving us without any avenue for recourse.

Finally, to give some context, his original investments transferred from Aviva were a Flexible ISA (68%) plus a Unit Trust (32%).  The products he was persuaded to take were a St James’s Place ISA and St James’s Place Unit Trust, at roughly the same proportion.

Another concern I have is the time factor. This has only just come to light, although the switch occurred back in March/April of 2022.

diystarter7

Hi

No offence but does dad lack capacity and or was he lied to etc?

Thnaks

Albermarle

However, I also appreciate that that by failing to scrutinise the documents properly, and by signing whatever was put in front of him, my Dad could have unknowingly facilitated this scam, leaving us without any avenue for recourse.

Best to be careful with accusing large companies of operating a scam. Your Dad's investment is still safe, and probably invested appropriately. 

In reality it is more about pressure selling to potentially vulnerable people, to hit sales targets/get commission/ charge the 2.5% fee.

I would be interested to know how SJP got involved in the first place. Did he supply his details to them, by responding to an advert maybe ?

dunstonh

However, looking at the documents it states that my Dad requested a “better service from your provider”.

That is too generic.     What has Aviva done wrong that your Dad is willing to increase his charges to accept an alternative provider? -  that is the sort of thing you would expect to be documented. i.e. "Unfortunately, due to a bad experience when Aviva did xyz.....   you have chosen to move to SJP despite the charges being higher".  And you would expect a cost comparison to be included in the report (its pretty much mandatory).

I use Aviva platform for a fair bit.  It isn't my favourite platform but we have special terms with them and its cheap.   The use FNZ software, which is same software used by the majority of the big platforms.  Its mature software that pretty much does what it is designed to do.     Aviva's service on the platform side is fine. Not the best but nothing that causes concern.    ]

So, has your dad had a bad experience with Aviva or was it fake reason?

 “Thank you for confirming on your application that you have not received any financial advice in relation to this transaction. As this was your decision to proceed, it is important to remind you that, on this occasion, you have not benefitted from an assessment of suitability that would normally be conducted as part of the financial advice process. As a result of this you will be giving up some of your protections available from the Financial Ombudsman Service”. I found this very interesting, not least because yet another document states he has been charged a fee, running into thousands, supposedly for advice.

That is not good.      Whilst it is not uncommon to see such a document on a transfer where maybe it's a couple of hundred pounds on an old auto-enrolment scheme where it's too small to make much difference, it would not be expected on an 80 year old moving their whole pension over via a sales rep.

Finally, to give some context, his original investments transferred from Aviva were a Flexible ISA (68%) plus a Unit Trust (32%).  The products he was persuaded to take were a St James’s Place ISA and St James’s Place Unit Trust, at roughly the same proportion.

How much was the unwrapped (GIA) holding?    A sale in this could have generated a capital gains tax liability.  Do you know if it has?

Another concern I have is the time factor. This has only just come to light, although the switch occurred back in March/April of 2022.

Time is not a factor here.  Deal with it now but it doesn't matter that it was in 2022.

my Dad could have unknowingly facilitated this scam, leaving us without any avenue for recourse.

It is not a scam.  Possible missale.  Possible misunderstanding.

What you describe is your interpretation of the events that have occurred.    Based on those, there are plenty of concerns.  However, we do need to be wary of the four truths principle.   What you say happened.    What they say happened.  What actually happened and what the evidence suggests happened.

You also need to be prepared to accept that your dad may have done this willingly.   If he has had the same person for many years, then he may be comfortable with them and doesn't mind paying more.   If the disclosures were of regulatory standard and he chose to do it then it doesn't matter that they cost more.

Audaxer

Albermarle said:

However, I also appreciate that that by failing to scrutinise the documents properly, and by signing whatever was put in front of him, my Dad could have unknowingly facilitated this scam, leaving us without any avenue for recourse.

I would be interested to know how SJP got involved in the first place. Did he supply his details to them, by responding to an advert maybe ?

The way I read it was that OP's dad had an IFA who now works for SJP and 'persuaded' his dad to move his investments to SJP?

John905

Thanks for the swift and detailed replies, much appreciated.

I wouldn’t like to say that he lacks capacity, but as I mentioned, finance is definitely not his thing. In terms of being lied to I think there could be an argument. In no way did he have any issue with his previous provider. The case to switch did not involve any argument that the new investments were likely to perform any better, it’s based on my Dad supposedly saying he wanted due diligence of the fund to be enhanced and a better service. This is total news to him (though I appreciate he has probably unknowingly signed something to this effect).

From what I can see, SJP became involved when his IFA became a partner practice. He has been using this adviser for a few years now.

How much was the unwrapped (GIA) holding?    A sale in this could have generated a capital gains tax liability.  Do you know if it has? I'll need to check the documents again as I'm not familiar with the terminology. In total you were looking at approximately £300k.

My fear here is that they might well have acted within the letter of the law, but certainly not in my Dad's best interests. As you said dunstonh, he has agreed to this willingly, without questionning the nature of the advice given or its motivation, at least up until now. In effect he has paid 2.5% of his investment for something he didn’t request, didn’t want and was not aware that he had.

Pat38493

John905 said:

Thanks for the swift and detailed replies, much appreciated.

I wouldn’t like to say that he lacks capacity, but as I mentioned, finance is definitely not his thing. In terms of being lied to I think there could be an argument. In no way did he have any issue with his previous provider. The case to switch did not involve any argument that the new investments were likely to perform any better, it’s based on my Dad supposedly saying he wanted due diligence of the fund to be enhanced and a better service. This is total news to him (though I appreciate he has probably unknowingly signed something to this effect).

From what I can see, SJP became involved when his IFA became a partner practice. He has been using this adviser for a few years now.

How much was the unwrapped (GIA) holding?    A sale in this could have generated a capital gains tax liability.  Do you know if it has? I'll need to check the documents again as I'm not familiar with the the terminology. In total you were looking at approximately £300k.

My fear here is that they might well have acted within the letter of the law, but certainly not in my Dad's best interests. As you said dunstonh, he has agreed to this willingly, without questionning the nature of the advice given or its motivation, at least up until now. In effect he has paid 2.5% of his investment for something he didn’t request, didn’t want and was not aware that he had.

Huh?  How can an IFA become a "partner practice" of a particular pension provider?  Or do you mean that his IFA is no longer an IFA and went to work for SJP (and is therefore no longer an IFA but an FA)?  I'm guessing it's along the lines of the latter otherwise why would he have been asked to sign a disclaimer that he didn't need IFA advice?

IFA's have to give completely impartial advice as far as I know and can't recommend a particular pension provider based on financial advantage to themselves.

On the other side, will this person, IFA or not, say that your father wanted to remain with him as his adviser because of familiarity and trust, and is that a defence?

squirrelpie

"How much was the unwrapped (GIA) holding?    A sale in this could have generated a capital gains tax liability.  Do you know if it has? I'll need to check the documents again as I'm not familiar with the terminology. In total you were looking at approximately £300k."

The unwrapped part is the unit trust. Pensions (SIPPs etc) and ISAs are wrappers that can provide tax advantages.

TadleyBaggie

My IFA was retiring and recommended a move to another platform, if it had been SJP it would have been an absolute NO! The platform I'm now on (and they seem to be doing good) is only asking 0.5% fees.

GDB2222

I am perplexed by the letter to dad. If dad wanted to make the transfer without financial advice, why does the letter give *any* reasons at all for making the transfer? 

gm0

Selling the client list to a tied FA practice is a regularly used retirement route for IFAs.  A weakness of the IFA system - he or she that is one today may not be one tomorrow.  At which point this very situation can arise.  As it seems to have done.  Singleton IFAs exit the business for a variety of reasons - age, current partner gone, back office support for modern compliance workload is sustainable/easier if they join somebody.  And a cash out for the business they built and its ongoing funds under management / goodwill value.

An IFA who has trusting relationships with their clients built over years now works for an FA firm. 
So comparatively easy for them to convince some of them to remain with them during the transition step (almost by default). 
And later to introduce others to the relationship or to convince via one or more sales calls or ongoing service review cycles to move specific products across.

The issue here is this. 

If the individual is making their own decisions and has no POA in place - the implication being that they do not.  So provided the adviser has done the regulated compliance paperwork *correctly* at each step (per FCA conduct of business) and the contracts were all signed and returned correctly etc. then while you may be very dissatisfied it will be hard to argue that a contract was not formed and executed correctly.  While you may subsequently convince your relative of their folly in trusting this character and distressing them in the process.  This can exist alongside there being no practical way to achieve cancellation/reversal/exit.

Gathering the audit trail of what happened and the documentation.  Finding a compliance breach or some other sloppy work would be the first order of business to see if there is a basis to cry foul and become a squeaky wheel and the source of a nasty regulations complaint.   Which you will drop for SJP waiving all exit fees to leave and the return of the initial charge. 
That like the contract being formed is just a negotiation.

Now they may prefer to exit you rather than have the hassle. Or they may take a harder line (if they believe their audit trail is complete and defensible) characterised by "if you can't take a joke you should not have signed the contract".   

In other news - should you now leave - here are our exit fees (essentially paying the management charge for a period after leaving for recent contributions).  Which I suspect you will find once you review documentation carefully.

If you work for an FA (any of them) or are an IFA selling a DFM solution to particular client categories - then believing (or pretending convincingly to believe) in the house product is a pre-requisite for selling it out there. 

And that will nearly always be a magic beans based aren't we clever argument - better fund review and management, layers of obfuscation of logical portfolios and allocated fund managers between the client portfolio and the underlying equities and bonds and alts.   Better "investment" performance (gross) with no attempt to keep risk level taken constant or compare outcomes net fees with cheaper alternatives.  Any adviser that can't with a straight face say that the product they are shilling this week is "better" than the one you have on some dimension or another - can't realistically work in this business for long. 

Even when you enjoy the protection of having received formal advice for a transaction you are only able to complain about the product being manifestly "unsuitable" for someone of your wealth, goals, age, risk appetite.  It doesn't have to be the cheapest.  And it is unknowable if it will be better or worse than average or any other active portfolio tilt.

There are constraints where something really isn't better allowing for cost comparison.  One of the investment switching documents for some types of transaction is presentation of a "critical yield" calculation to the customer. 

Most advisers will stretch the A is better than B idea (where A is the one I am selling and B is the one you already have).  But there are limits to what they can do, or that their risk management function would want to see documented - should it become a high profile complaint.  And the regulator has made the documentation of the calculation to the customer a mandatory deliverable.  So in effect.  A (high) limit to the predatory behaviour that is tolerated.

I am not Conduct of Business savvy enough (FCA publish the COB) enough to know exactly what the adviser should and should not have done here.