St. James's Place Wealth Management Plc · DRN-5568102

The complaint Mr R, through his representative, complains about the unsuitable advice he received from St. James’s Place Wealth Management Plc (‘SJP’) to transfer his existing pension plans to a new SJP personal pension. He says it involved higher charges which weren’t considered or explained, and says he should have been advised to maintain and potentially increase his existing plans. Mr R also complains that he’s not received all of the annual ongoing advice reviews he was being charged for. He considers he has lost out as a result and is seeking compensation. What happened The following is a summary of the key events and background leading up to this complaint. Mr R has been a client of SJP for many years. His relationship goes back to at least 1999 when he started an investment Individual Savings Account (ISA) and made regular monthly contributions up until 2015. In April 2022, Mr R met with SJP to discuss retirement planning with a view to transferring his existing pensions. SJP completed a fact-find document to record and update Mr R’s personal details, circumstances, objectives and attitude to risk. The key details recorded here are as follows: • Mr R was aged 56, married, had no dependents and was in good health. • He was self-employed and due to his business being new, his annual income was around £10,000. This resulted in a negative disposable income, but it was recorded he was comfortable with this and that his income would change. • He and his wife had around £70,000 in cash-based assets, he (jointly) owned his own home, he had an existing ISA valued at around £12,000, and he jointly had an outstanding interest only mortgage. • He held five existing pension plans from previous employers – four personal pensions with three different providers with a combined transfer value of around £260,000) – and a Defined Benefit (DB) pension expected to provide an income of around £700 a year. • Mr R’s objectives were to look to consolidate his pensions (not his DB pension) considering using the new plan to actively contribute to, and to access holistic advice. SJP also carried out an assessment of Mr R’s attitude to risk, which it deemed was ‘Medium.’ The fact-find also referred to a discussion about Mr R investing some of his and his wife’s savings into an ISA. But it appears this did not go ahead as Mr R chose to focus on retirement planning. On 28 June 2022, SJP issued Mr R with a suitability letter, which set out its recommendation. The letter referred to a number of documents given to Mr R during the meeting, including a Key Features booklet, an illustration setting out the costs (this showed an initial fee of 2.17% of the amount invested and the ongoing advice fee of 0.5% a year) a

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Service and Costs Disclosure Document, which set out the services provided and the terms of business. The letter said it recommended regular reviews should be carried out and that the adviser would contact Mr R each year to arrange a meeting to review his circumstances and objectives. The letter recorded Mr R’s overall objectives, which included having a sufficient retirement fund for a comfortable retirement, to consolidate his existing pensions to given them the attention they deserve, receive regular reviews and advice, and achieve capital growth over the medium term. The letter then set out SJP’s recommendation that Mr R transfer four of his existing pensions into a new SJP retirement account to meet his objectives. It recommended investment into SJP’s Managed Fund, which it deemed matched Mr R’s attitude to risk. It said it recommended maximising contributions and would review contribution levels on an ongoing basis and when affordable. The letter explained why SJP had discounted keeping Mr R’s pensions where they were because it gave no access to advice and Mr R would remain responsible for his own fund choice. It said a Stakeholder pension had been discounted because it did not allow for advice charges to be paid from the plan, so they would have to be paid separately from taxed income. And as a result, the cost differential was not typically material. The letter said the adviser had discounted or reduced the annual management charge, so the additional cost of transferring was 1.17% a year. It also referred to the loss of the ‘lifestyling’ feature on two of Mr R’s existing plans (where funds are moved to less risky assets as the target retirement age approaches) as well as the loss of smoothed returns on the existing with-profits fund investments. The letter acknowledged Mr R would be subject to an Early Withdrawal Charge (EWC) on the new pension (3.6% in the first year reducing to 0.6% in year four and then 0%.) The letter also explained how Mr R’s attitude to risk had been assessed and arrived at as ‘Medium’ risk referring to his capacity for risk, affordability and the investment term of at least five years. Mr R accepted the recommendation and three of his pensions were transferred to SJP. It appears that for some reason (SJP has not told us why) one of his pensions was not transferred. SJP has provided evidence that annual reviews were carried out in March and September 2024. I’ll address this in more detail later on. In August 2024, Mr R complained to SJP via his representative. In summary he said: • He did not receive all the annual ongoing advice reviews he paid for. • There are no fact finds to support any of the recommendations or a suitability report to support the ISA recommendation. • He should have been advised to maintain and potentially increase his existing pension plans and not start a new one. • The advice to transfer his existing pensions was unsuitable – the higher charges weren’t adequately considered or explained, there is no evidence of assessing his attitude to risk and there is nothing to demonstrate if or when he would benefit from the transfer. Because SJP did not meet the necessary deadline to answer the complaint, Mr R referred his complaint to us.

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One of our investigators considered the matter and in summary they concluded the following: • Mr R was not paying for ongoing advice on his ISA but he agreed to annual reviews of his pension plan at a cost of 0.5% each year. • There was not enough evidence to show that the first annual review in 2023 had taken place, so they recommended the 2023 fees should be refunded plus a return of 8% interest a year. • While the information SJP recorded was not as detailed as it might have been, there was enough evidence to show that a review of Mr R’s circumstances and plan was carried out in September 2024, so no further fees should be refunded. • There is no advice paperwork available for the 1999 ISA sale, but there was nothing to indicate the advice was unsuitable for Mr R and in any event, based on the amount he withdrew versus the amount invested, he had not suffered a loss. • The advice to transfer Mr R’s pension plans to a new SJP plan was suitable – he likely understood the level of risk given his previous experience, the loss of the ‘lifestyling’ feature and with profits-smoothing of returns were not reasons to deem things were unsuitable given Mr R’s assessed attitude to risk, the outperformance required in light of the increased costs was reasonably achievable, and the existing relationship with SJP meant Mr R would have one contact for his financial advice. SJP accepted the investigator’s findings and agreed to refund the ongoing advice fee for 2023 plus interest at 8% a year. Mr R, through his representative said that they accepted the investigator’s conclusions about the ISA advice and fees, and he was pleased about the 2023 review refund outcome. But he disagreed with the pension transfer advice and disagreed there was evidence to support an annual review taking place in 2024. He said there is no evidence to support the attitude to risk assessment or evidence he was willing to take any risk. He said his pensions were invested in lower risk funds suggesting he was risk averse. He said the adviser did not carry out a future income and expenditure analysis and did not adequately assess his retirement needs and objectives. He said he should have been directed to an independent adviser where his needs and attitude to risk would have been properly assessed instead of being switched to a more expensive product incurring loss of benefits without sufficient reasoning. He said he was concerned that SJP had still not completed one of the pension transfers reflecting SJP’s substandard service and lack of ongoing advice. He also said the investigator had failed to comment on or make any award for distress and inconvenience, which had been made worse by SJP’s failure to formally respond to his complaint. The investigator wasn’t persuaded to change their mind. In summary they said Mr R’s attitude to risk assessment as medium was reasonable given his previous experience and medium-term objective. They said Mr R was not giving up any guaranteed benefits by transferring, and the loss of the ‘lifestyling’ feature wasn’t a reason to retain his plans because he could discuss reducing the level of risk on his plan and fund switches with his SJP adviser, if appropriate, and nearer to his retirement age. They repeated that there was sufficient evidence that an annual review was carried out in 2024. In relation to Mr R’s concerns that one of his pensions had not in fact been transferred, they said this was counterintuitive to his complaint the advice was unsuitable. And they said they would not make an award for distress and inconvenience because they would not make an award of this nature for delays in a business investigating

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a complaint and they considered any inconvenience was mitigated by the involvement of a professional representative. Because the matter couldn’t be resolved informally, it comes to me for a final decision. 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’ve taken into account relevant law and regulations, regulatory rules, guidance and standards, codes of practice, and (where appropriate) what I consider to have been good industry practice at the relevant time. And where the evidence is incomplete or inconclusive I’ve reached my decision based on the balance of probabilities – in other words, on what I think is more likely than not to have happened, given the available evidence and wider circumstances. The applicable rules, regulations and requirements As a regulated firm, SJP had many rules and principles that they needed to adhere to when providing advice to Mr R. And these can be found in the Financial Conduct Authority (FCA) handbook under the Conduct of Business Sourcebook (COBS) and Principles for Businesses (PRIN) as they were at the time of the advice. In relation to the ongoing advice element of the complaint, the following are most relevant and provide useful context for my assessment of SJP’s actions here. COBS 6.1A.22: A firm must not use an adviser charge which is structured to be payable by the retail client over a period of time unless (1) or (2) applies: (1) the adviser charge is in respect of an ongoing service for the provision of personal recommendations or related services and: (a) the firm has disclosed that service along with the adviser charge; and (b) the retail client is provided with a right to cancel the ongoing service, which must be reasonable in all the circumstances, without penalty and without requiring the retail client to give any reason; or (2) the adviser charge relates to a retail investment product for which an instruction from the retail client for regular payments is in place and the firm has disclosed that no ongoing personal recommendations or service will be provided. In 2014, the FCA produced guidance in the form of a factsheet (For investment advisers - Setting out what we require from advisers on how they charge their clients). The factsheet said: ‘Ongoing adviser charges Ongoing charges should only be levied where a consumer is paying for ongoing service, such as a performance review of their investments, or where the product is a regular payment one. If you are providing an ongoing service, you should clearly confirm the details of the ongoing service, any associated charges and how the client can cancel it. This can be written or orally disclosed. You must ensure you have robust systems and controls in place to make sure your clients receive the ongoing service you have committed to.’

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While the factsheet wasn’t published until late 2014, it didn’t mark a change to the rules firms like SJP were already expected to follow. In my view, it re-enforced or reminded firms of the standards already in place when providing on-going advice services. Having considered all of this and the evidence in this case, I’ve decided to uphold the complaint, in part, for largely the same reasons given by the investigator. My reasons are set out below. Firstly, I can see that Mr R has accepted the investigator’s conclusions about the suitability of the investment ISA advice and that he did not pay an ongoing advice fee for this product. So, it follows that I don’t need to decide this element of the complaint. There are two parts to Mr R’s complaint that I will address below. Pension transfer suitability of advice Mr R has said there is no fact-find to support the recommendation. But as I said earlier on, SJP recorded Mr R’s personal details, circumstances and objectives as well as his attitude to risk in a fact-find document of April 2022. I consider there was a reasonable level of detail recorded here including notes about his self-employed status, his income level both now and expected in the future, as well as details about why Mr R wanted to consider bringing his pensions together under one roof. Overall, I consider this is the type of information and level of detail I would expect a firm like SJP to have captured to demonstrate it understood it’s client and their objectives. SJP’s advice was to transfer four of Mr R’s existing pensions held with other providers to a new SJP personal pension plan or retirement account. So, broadly speaking this was advice to replace investments / plans Mr R already had with something essentially the same. As such, I’ve carefully looked at whether the transfers were in Mr R’s best interests. As part of that, I’ve firstly considered the rationale for doing so. As I noted above, the key reasons documented were because Mr R wanted to consolidate his pensions to an actively managed scheme and to gain access to advice – none of his existing plans were under any form of advice or advisory service. I’m mindful that Mr R was a long-standing client of SJP’s. So, having everything under one roof to allow him to access advice on his retirement planning with an adviser, who it seems reasonable to assume he trusted, was in my view reasonable in the circumstances. I’m also mindful of Mr R’s wider circumstances. He was self-employed, he wasn’t contributing to a pension at this time and did not have access to a workplace pension. He was also at an age when I think it was reasonable to want to more actively engage with retirement planning and advice. So, taking all of these things into account, I think, overall, the rationale for transferring was a firm, and fair and reasonable one. In my view, consolidating things at this stage and having ongoing advice and management of his pension funds was in Mr R’s best interests. Importantly, Mr R was not giving up any form of guaranteed benefits, such as a guaranteed annuity rate or a higher tax-free cash entitlement by transferring. Mr R also retained his DB scheme. The transfer did mean that Mr R was foregoing a ‘lifestyling’ feature and with-profits smoothing of returns on two of the proposed pension transfers. But neither of things in my view made the advice unsuitable. The ‘lifestyling’ feature (a typical feature of an employer provided scheme and default type investment option) could be replicated, if deemed appropriate, through the provision of ongoing advice nearer to Mr R’s target retirement age of 65. And given Mr R’s assessed medium risk attitude towards investing, which I will discuss further below, his existing with-profits based investment weren’t aligned to his risk

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profile and so a move away from these, was not in my view unsuitable. Another important factor here is that the transfer of Mr R’s existing pensions resulted in increased costs. SJP applied special terms reducing the annual management charges payable, which meant the additional cost of transferring was 1.17%. But while there was a cost in transferring, given the rationale for transferring, and that in my view this was not an unachievable outperformance return, I don’t think the additional costs made the recommendation unsuitable. SJP also in my view clearly set out the costs – the suitability letter contained a section about replacement costs, there was an appendix to the report with a cost comparison table, and accompanying the report was an illustration document with cost information too – so, I think Mr R was able to make an informed decision. Mr R’s objective was for capital growth, which appears reasonable in the circumstances. I can see Mr R has said that SJP did not assess his true objective and it didn’t for example carry out an income and expenditure in retirement analysis to understand his retirement needs and objectives. But I think SJP did establish Mr R’s retirement objective. Which was to consolidate his pensions, seek capital growth over the medium term, and to gain access to ongoing advice, which as the fact-find recorded, was to give Mr R a clearer picture of achieving financial security at retirement for his family. SJP also recorded Mr R’s target retirement age of 65. So, I think this did represent a reasonable objective. I accept that SJP did not undertake an income and expenditure analysis in retirement to determine Mr R’s likely income need. And perhaps it ought to have done. But given Mr R’s circumstances, I think it’s unlikely he would have been able to provide an accurate picture of his needs at this time. Mr R was still eight or so years away from retirement, his business was in its infancy and his income was relatively low, so making contributions to his pension towards a target amount wasn’t known at this time but was something noted as being part of future discussions as his income grew. So, I don’t think SJP’s failure to carry this out at this time means the advice was unsuitable or undermined his objectives at this time. I think Mr R’s future income need was something that SJP could explore with him as part of the ongoing advice proposition. Turning to Mr R’s attitude to risk – it was recorded that he was a ‘Medium’ risk investor. Mr R says the assessment of his risk was insufficient. He’s also referred to SJP relying on an assumption that he was ‘Medium’ risk. But I disagree. Both the fact-find and the suitability letter refer to the discussion had around Mr R’s attitude to risk and in my view, these recorded things in what I consider to be a reasonable level of detail. For example, reference is made to using SJP’s ‘Understanding the balance between risk and reward’ brochure as part of the discussion and assessment. SJP has not provided us with a copy of this in this particular case, but I have seen it before. This set out amongst other things, the various risk categories, risk descriptions and the different asset classes. I think given Mr R’s previous investment experience with his ISA and his pension investments, he likely understood the concept of risk and reward and the differing categories or approaches. SJP also recorded it had considered Mr R’s capacity for risk, which given the funds were not directly impacting his day-to-day needs, he could afford to take some risk. And while the funds represented a significant part of his private pension provision, given Mr R’s age and the expected investment term, I don’t think this undermined his capacity for risk. So, overall, I think SJP’s assessment that Mr R was a medium risk investor was a fair one. I can see Mr R says he was risk averse and that the way his existing pension plans were invested – for example with-profits – supports that. But I’m not persuaded by this. As I said above, I think Mr R was someone who ought reasonably to have understood the concept of investment risk – this wasn’t his first venture into investing. And while some of his existing pensions did contain with-profits funds, this was likely a result of default investment

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strategies (his pensions were employer schemes) rather than a conscious or active choice on Mr R’s part. And given his objective and the assessment SJP undertook of his attitude to investing, it would appear the with-profits based approach was not in line with this current risk appetite. So, I do not consider Mr R was in fact a risk averse investor at the time. I don’t think the evidence reasonably supports that view. Finally, looking at the recommended investment fund – SJP advised Mr R to invest his pension funds in the Managed Funds Portfolio. And based on the underlying fund make-up of this portfolio documented in the suitability report, it appears the pure equity content of the investment fund was around 75%, but that included an absolute return fund, with the remainder in bonds / fixed interest and a small percentage in other assets. In light of this and with around 11 underlying funds comprising the portfolio, I think the investment recommendation was in line with the level of risk Mr R was prepared to take and so was suitable. Looking at the information Mr R was provided with at the time, I’m also satisfied that SJP disclosed what was necessary and in the level of detail required to enable Mr R to make an informed decision. I’ve already said that the cost information was clear. In addition, the suitability report set out the disadvantages of transferring his pensions as well as the alternatives to the proposed transfers, including leaving things where they were. Mr R has said that in the absence of SJP being able to provide appropriate advice, it should have directed him to an IFA instead who would have involved lower costs and where his needs and objectives would have been properly assessed and considered. But I’ve explained above that I think SJP’s advice was appropriate and suitable at the time, so in the circumstances there was no need to direct Mr R to an independent adviser. So, overall, I think SJP acted fairly and reasonably here – I’m satisfied its recommendation to transfer Mr R’s pensions to a new SJP retirement account was suitable and in his best interests. It follows that I don’t uphold this part of Mr R’s complaint. Ongoing advice Mr R signed up to SJP’s ongoing advice service, which comprised an annual review of the suitability of the advice based on his circumstances and objectives, which the adviser would proactively arrange. The cost of the ongoing service was 0.5% a year of the fund value. SJP has agreed with the investigator’s conclusions that there is not enough evidence to support an annual review taking place for Mr R in 2023. Because this is accepted by the parties, I don’t need to discuss this further. Mr R says there is insufficient evidence that a review took place in 2024. But I disagree. I’ll explain why. There is some evidence a review took place in March 2024 – SJP has provided a fact-find updated by the adviser in March 2024. And it has provided a copy of an email the same adviser sent to Mr R following their meeting. Unfortunately, it is undated, but I think it is likely from the same time. It says: ‘Thank you for your time last week… We reviewed your circumstances and updated your current situation. Please let me know if there is any change in your future circumstances.

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The current products you hold with us continue to be suitable for your needs. I believe that your emergency funds are sufficient for your needs as well. We also reviewed the funds you are currently invested in. These continue to be suitable based on your current Attitude to Risk and lifetime goals.’ I accept this is somewhat light on detail and specifics, although it does indicate a meeting and a form of review did take place. But in my view the evidence is clearer that, later on in September 2024, Mr R met with the adviser again. And I’m satisfied there is enough here to reasonably show that an adequate review was carried out. I’m mindful this was a bit later than the 12 months after the advice. But I’m equally mindful that there is some evidence to support an earlier meeting in March 2024 and Mr R’s wife was also a customer. So, it would seem reasonable that their respective review meetings were conducted jointly and at a convenient time. There is evidence of an updated fact-find of 5 September 2024. And an email from the adviser confirming the outcome of the meeting. The email is again undated. But there are two references within the email which I think, on balance, support the view that it was sent following a review of 5 September 2024. Firstly, the adviser refers to the meeting taking place ‘last Thursday’ and 5 September 2024 was a Thursday. And it refers to Mr R recently paying off his mortgage. And this happened after March 2024. The email from the adviser says: ‘We have reviewed your current situation, including recently paying off your mortgage. With this major financial obligation behind you, your focus has now shuffled towards planning for retirement. We can work together to ensure you have a solid plan in place to meet your retirement goals, ensuring a comfortable and secure future. Based on the above. the current plans you hold with us continue to be suitable for your needs… I believe your emergency funds are adequate for your needs. You have approximately £19,000 in accessible cash accounts… We also reviewed the funds you are currently invested in… [Mr R] your pension is invested in Managed Funds Portfolio... I believe these portfolios are the most SJP suitable for you…These continue to be suitable based on your current Attitude to Risk and lifetime goals.’ While I accept what is written here is fairly concise, in my view, it is enough to show that SJP carried out a review of Mr R’s plan based on his circumstances and objectives including his attitude to risk. On balance, I think there is enough here to show that Mr R got the service he paid for in 2024. Mr R has said that SJP’s failure to complete the transfer of one of his pensions is reflective of the lack of ongoing advice he received. As I said earlier on, it is unclear why this transfer didn’t take place. It’s possible it was known and discussed earlier on, so I cannot fairly conclude this is evidence of a failing on SJP’s part. Mr R’s representative says that he has also expressed concern that the transfer hadn’t completed. But this somewhat undermines Mr R’s complaint that the transfer advice was unsuitable. But if, on reflection, Mr R remains concerned about this, then he should contact SJP in the first instance to allow it to

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investigate further. I can see Mr R has referred to the distress and inconvenience this matter has caused. But I’ve not seen enough to persuade me that Mr R has suffered distress and/or inconvenience as a result of the things SJP did wrong. So, I make no distress and inconvenience award here. Putting things right I think Mr R should receive a refund of the ongoing advice fees he paid in the first year (July 2022 to July 2023) because he did not receive an annual review in 2023. Mr R should also receive a return on the refund amount. While the investigator’s recommended lost growth return of 8% simple interest a year might not exactly match the position had the fees not been taken for the period in question, in my view it represents both a fair and pragmatic resolution in the circumstances. And both parties have agreed. So, overall, I think this represents fair compensation. SJP should therefore do the following: • Refund Mr R the first year’s ongoing advice fees. • Add interest at 8%1 simple per year from the date they were paid to the date of my final decision. • Provide Mr R with the details of the above calculation in a clear, simple format. The compensation amount should be paid into Mr R’s pension plan if possible. The payment should allow for the effect of charges and any available tax relief. The compensation shouldn’t be paid into the pension plan if it would conflict with any existing protection or allowance. If a payment into the pension isn’t possible or has protection or allowance implications, it should be paid directly to Mr R as a lump sum after making a notional reduction to allow for future income tax that would otherwise have been paid. If Mr R has remaining tax-free cash entitlement, 25% of the loss would be tax-free and 75% would have been taxed according to their likely income tax rate in retirement – presumed to be 20%. So, making a notional reduction of 15% overall from the loss adequately reflects this. My final decision For the reasons above, I’ve decided to uphold this complaint, in part, and I instruct St. James’s Place Wealth Management Plc to put things right in line with the approach above. I make no other award. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr R to accept or reject my decision before 17 September 2025. Paul Featherstone Ombudsman 1 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 Mr R how much it’s taken off. SJP should also give Mr R a tax deduction certificate in respect of interest if Mr R asks for one, so he can reclaim the tax on interest from HM Revenue & Customs if appropriate.

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