Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Looking at the detail, SJP is receiving net new investments in its pensions business the investment and unit trust business has net withdrawals in a period that covers “ISA season” it’s a sign that only the stickiest new business is holding up and who knows if this will suffer the same decline in time as regular contributions are diverted by concerned clients.
Is that a real thing or just speculation at this point?
£280mn feels like there is a zero missing assuming they may have to start compensating partners and clients.
This failure to record evidence of ongoing advice cuts both ways and SJP is the only one to blame.
I wonder if they have a group of people watching the post office fiasco thinking we are next.
I’m hoping the story about directors buying at £6 is old news because as bad as them losing 1/3 of the value would be if they paid 50% more than the current price now they really would have lost the plot.
Yesterday was exactly what you’d expect, at some point the shares were going under £4 depending on when and how far was really going to decide where it ended up. The early strong fall prepared the ground for a bounce, maybe a little stronger than expected, if the price had made it through to mid-afternoon without breaking through it would have fallen further when it did go.
Today is a different day £4 is no longer as much of a barrier so it’s back to anyones guess till the £3.50 support gets challenged.
I get why this is in the SJP chat, but the people shorting SJP are grown ups, making a lot of money because their belief that there is more bad news than is being shared keeps proving correct, wouldn’t it be better to tighten up corporate and regulatory reporting so the possibility of bad news waiting to come out at a future date was available to everyone and not just folk with intuition or crystal balls.
Drd21 I am sure you are correct and the claims management companies are turning a blind eye to the vast opportunity presented by all the other financial services companies.
Little does it matter though, the problem for SJP is that they are haemorrhaging cash, it has drip fed the bad news to the markets leaving everyone guessing when they will gain some certainty.
I don’t think you’ll find the same issues at other financial firms. Ever since the regulations changed there has been a paranoia that something like this would happen, somehow SJP convinced themselves that they were special and just saying they were providing good service without a robust process would be enough.
The idea that they can get advisers to pay back fees is a non starter, firstly they withheld some of the fees and paid the advisers as contractors and secondly they regularly reviewed the compliance of advisers individually and were satisfied at the time of those reviews it will be hard to claim they got the reviews wrong without accepting they were negligent, that will bring even more problems out in the open.
The biggest problem is that this is what SJP are willing to admit to, it could be the tip of the iceberg. 15,000 is approximately 10% of customers and ongoing advice fees are at most 25% of charges. If there were a bigger proportion of customers or it turned out more than just the ongoing advice fees were problematic that £400mn+ figure they have admitted could balloon to several billion and still be a conservative estimate.
It seems likely that an exit from the FTSE 100 is now on the cards, how much stock will be dumped in the market when the trackers shift to its replacement.
A bit ironic that SJP’s own shares are such a good example of why active management can help avoid known problems in tracker funds.
The FCA are being forced to play hardball, SJP have managed to dodge RDR, for over a decade. The new charging structure has been brought about because SJP have consistently overcharged clients.
Once the initial advice fee has been paid through a 60 basis points levy on ongoing charges compared to clients who do not pay for the initial advice.
The third group to consider in this are the SJP staff, many of whom are receiving high-five and six figure salaries for relatively junior sales management roles. SJP can easily resolve the partner and shareholder issues by cutting the fat in its sales management function however, these are precisely the people making decisions.
The FCA are acutely aware that if they move too fast, SJP is likely to collapse.
Without digging too deep, you can see net outflows in all but the pension business for the last 3 months. Pensions have regular contributions which will take longer to fall away but it’s already down a long way and it wouldn’t be unheard of for those to go negative in the next quarter.
Property funds are already suspended for life and isa business, if the pensions go the same way the writing is on the wall.
Very little detail on this £1bn bail out they are cooking up, it’s a brave move to say there are no problems and ask for around a third of the value of the company to fix it.
There needs to be an almighty dollop of truth to wash this down.
The investments should be ring fenced and not mixed in with the company’s own funds.
That said there is a conflict of interest for advisers who are reliant on keeping as much funds under management as possible, the funds are struggling as managers get paid peanuts and perform accordingly. The majority of the charges go towards SJP’s margin and supporting the lifestyles of its management.
The best thing to do is seek independent financial advice, SJP’s advisers are in a worst of all worlds scenario where they are responsible for all costs but SJP controls all their income and advice.
They haven’t addressed the issues with this morning’s announcement it’s just a matter of time before they are hit again. The competence and honesty of the management will start biting soon they can’t keep making baby steps to see what they can get away with.
You only need to get hold of a product illustration where fees are waived to see ongoing product charges of 0.4%, if that is what the FCA has seen, SJP is overcharging 0.6% on a standard pension and the correction in fees is much more than profits based on current expenses. They will have to cut back on all the largess paid for with excess charges to survive but if the past 4 months have showed us anything SJP isn’t proactive enough to steady the ship.