LONDON (Reuters) – Shares in British wealth manager St. James’s Place (SJP) tumbled by almost a third in early trading on Wednesday, after it set aside 426 million pounds ($539 million) to cover the cost of mounting customer complaints over its charges.
The company’s stock was last down 30%, putting it on track for its biggest daily drop and sinking shares to their lowest level in 11 years.
“Complaints increased in the second half of 2023, and there may be concerns that more will come in,” analysts at Jefferies said in a note, adding that the company’s final dividend of 8 pence per share also fell short of analysts’ forecasts.
St James’s Place swung to an annual loss after tax of 9.9 million pounds for 2023 on the provision, compared with a net profit of 407.2 million pounds a year earlier.
The company undertook an assessment into the delivery of historic services to clients, following a significant increase in complaints, particularly in the latter part of 2023 and made the provision for potential client refunds to address setbacks, CEO Mark FitzPatrick said in a statement.
SJP said it had been engaging extensively with the Financial Conduct Authority on the matter.
The results come amid scrutiny of fees in the sector, lower net inflows and as uncertainty over the economic outlook dampens investors’ appetite for managed funds.
The FTSE 100 company said the hefty provision and the expected decrease in profit growth over the next few years would mean that total annual shareholder distributions would be set at 50% of the full year underlying cash result going forward.
($1 = 0.7901 pounds)
(Reporting by Eva Mathews in Bengaluru and Iain Withers in London, additional reporting by Danilo Mason; Editing by Rashmi Aich, Sinead Cruise and Christina Fincher)
