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

Beddie

It seems obvious to me that the former IFA moved to SJP with the sole business model of going back to his old clients and taking another bite of the cherry. He's probably done the exact same thing to many others.

I find it to be a very shady practice, because as you've said it only seems to benefit the adviser, not your Dad.

Pat38493

@gm0 so does this provider have large exit fees then?  I’m sure I have read a few times on these forums that most good providers these days don’t have exit fees or did I misunderstand that?

The general argument would be - if you are really that good, why do you need to lock me in to your service by having exit fees?  Especially if you have already charged me a huge entry fee.

MX5huggy

@Pat38493 SJP have potentially huge exit fees, fairly uniquely for a large provider aimed at the mass market. 

SJP charges an exit fee if a client withdraws their investments in some pension and bond products early. Clients are charged 6% of their total investment if they withdraw in the first year, with the fee tapering down 1% each year until it is waived after the sixth year.

phynix_uk

As an IFA myself, I can say that the actions of your father's 'adviser' are at very best questionable. Putting my very strong feelings about SJP aside and trying to remain professional, I agree with your assessment.  Shameful experience.

Clearly words have been put in your fathers mouth which is completely unacceptable as well as receiving documentation around no advice being taken... clearly this was done to protect the adviser given the nature of the switches.

Whether the current portfolio is better or worse is irrelevant at this stage, it's obvious your father did take advice from him and it's obvious this was deliberately written out of the paperwork.

I would absolutely be making a complaint and I would gather as much of a timeline together as possible.

You could ask anonymously what SJPs definition of a vulnerable client is and what procedures they have in place to deal with them. Given his age, it is likely that he would satisfy the criteria (whether he's super astute or not) and if the additional steps needed have not been documented by the adviser then they'd be up against it with the ombudsman in any case. 

I would be surprised if SJP don't take this pretty seriously given his age and the concerns you have, if it went public or to the ombudsman I can't see them defending it. 

Good luck. 

Alice_Holt

"Finally, to give some context, his original investments transferred from Aviva were a Flexible ISA (68%) plus a Unit Trust (32%). ... In total you were looking at approximately £300k."

  Just picking up on dustonh's point that  "A sale [of the Unit Trust] could have generated a capital gains tax liability."
With c£100k in the unit trust that does look a distinct possibility. 
If so:             

i) would one expect an IFA to consider this, and should it be covered in any documentation ? 

ii) if the 'advice' to transfer has generated a CG liability, (without the 80 year old client realising this), would this be a breach of duty by the IFA and a potential compliant to the ombudsman / trade body ?  

iii) additionally would one expect an IFA who has an ongoing relationship with their client to advise on making use of the client's annual capital gains allowance, and a transfer into an ISA to defuse a future CG liability. 

Albermarle

Pat38493 said:

@gm0 so does this provider have large exit fees then?  I’m sure I have read a few times on these forums that most good providers these days don’t have exit fees or did I misunderstand that?

The general argument would be - if you are really that good, why do you need to lock me in to your service by having exit fees?  Especially if you have already charged me a huge entry fee.

You are right most good providers do not charge exit fees, but SJP do...

dunstonh

i) would one expect an IFA to consider this, and should it be covered in any documentation ? 

An IFA would.  So, should an FA.   But a sales rep for a tied provider has got the person to sign an execution-only letter?   

ii) if the 'advice' to transfer has generated a CG liability, (without the 80 year old client realising this), would this be a breach of duty by the IFA and a potential compliant to the ombudsman / trade body ?  

Its not an IFA.  SJP products are not available to IFAs.   Mainly as no IFA would recommend them if they were as they are too expensive.   Plus, IFAs are not allowed to factor in exit charges.    Only vertically integrated firms can.  Something that many consider to be a loophole that is unethical but it is within the rules (vertically integrated is where the adviser, provider and funds house are all part of the same company).

FAs are required to take into account all potential disadvantages in their advice just as IFAs are.

iii) additionally would one expect an IFA who has an ongoing relationship with their client to advise on making use of the client's annual capital gains allowance, and a transfer into an ISA to defuse a future CG liability. 

Its what you normally get with an ongoing service whether its an IFA or an FA.

Malthusian

Alice_Holt said:

ii) if the 'advice' to transfer has generated a CG liability, (without the 80 year old client realising this), would this be a breach of duty by the IFA and a potential compliant to the ombudsman / trade body ?  

Probably. The adviser would have to show that the existing investment is unsuitable and so unsuitable that it was worth paying the CGT. This seems very unlikely. It certainly wouldn't be justified by blether along the lines of "you really really wanted your money to be managed by SJP" or "you believe SJP will outperform Aviva by enough to make up for the tax bill".
This is theoretical at this point as we don't yet know whether any CGT was payable.
There is also an overriding issue here. The OP seems to have a document which indicates that the business was done on an "execution only basis" without advice being given - even though it was. But they also have documents which sound like a (badly written) advice letter. 

   iii) additionally would one expect an IFA who has an ongoing relationship with their client to advise on making use of the client's annual capital gains allowance, and a transfer into an ISA to defuse a future CG liability.

A good FA would certainly do this. Whether it can be expected as a minimum requirement is another matter.
A client would have a strong potential complaint if they were paying ongoing fees, and either a) regular use of CGT and ISA allowances was explicitly mentioned as part of the service they were paying for, but was not done, or b) they weren't receiving any ongoing service at all.
@OP: The first fundamental issue here is: does your dad want to make a complaint? Do you have Lasting Power of Attorney for him so you can make and carry through a complaint on his behalf, as you intend to?
If he does not want to make a complaint and has capacity to manage his own financial affairs (which you've confirmed he does; "finance definitely is not his thing" doesn't even suggest lack of capacity) then you may have to file it under "his money, his choice".

handful

I'm currently with SJP with one DC pot and although I wasn't duped going with them (a family member worked for them for a while) I wasn't aware of the 7 year tie in for every contribution(my fault for not reading the small print). The performance has been broadly similar to other pots that I held elsewhere but I did want to consolidate into my SIPP last year before realising I was going to get stung with some significant charges. I am now going to wait until they drop off but having contributed for 5 years this will be some time. I think his decision will be seen in the long term as an annoying one rather than a disastrous one depending on the choice of investments of course.

Pat38493

handful said:

7 year tie in for every contribution

Are you saying it's not just a 7 year tie in from when you first open it, but 7 year tie in for each individual deposit you make there?