Last Tuesday, the Financial Conduct Authority (FCA) made a startling revelation to the Treasury Committee: internal decisions will now be filtered through its shiny new secondary growth objective. In simpler terms, if transparency threatens the City’s competitiveness or disturbs a “too big to fail” institution, silence prevails. Their justification? Future consumers will supposedly benefit. What about current victims? They’re left out in the cold.
Today’s Sunday Times explains that this is not the first time:
“An email from Martin Wheatley, who was the FSA boss, from October 2013, recalled “pressure we received” from Sajid Javid, who was a Treasury minister at the time, to “go easy on the banks”.”
Take the ongoing interest rate swap scandal impacting small businesses as a prime example. Many victims are still tangled in legal battles. Would the FCA exclude a large group of these victims from justice? It seems they already have.
So, are there other big organisations that the Treasury minister has asked the FCA to go easy on?
Is St. James’s Place “Too Big to Fail”?
St. James’s Place (SJP) might fit the description. With over 4,800 advisers managing upwards of £184 billion in funds under management (FUM), SJP is a giant. That’s an average of £38 million in FUM per adviser, spread across 1,000,000 clients, each holding around £180,000 in assets. On paper, it’s an impressive operation, with 200 clients per adviser. But is it all as polished as it seems?
Fees for No Service: A UK Replay of the AMP Scandal?
Let’s talk about fees—or more specifically, fees for no service. SJP is under scrutiny following a Section 166 review of its “fee-for-service” practices.
How long should the review go back? Some say 2018!
MiFID II, which came into effect on 3 January 2018, introduced enhanced requirements to ensure that ongoing advice reviews are not merely offered but actively provided to clients. This change aimed to strengthen investor protection by ensuring that clients receive continuous and proactive advice, rather than just having the option available.
Under MiFID II, firms are obligated to conduct regular assessments of the suitability of the financial instruments and services they provide to clients. This means that advisers must engage in ongoing reviews of their clients’ portfolios and investment strategies, ensuring they remain aligned with the clients’ objectives and circumstances. Simply offering the possibility of a review is no longer sufficient; firms must take proactive steps to deliver these reviews.
This approach enhances transparency and ensures that clients are consistently informed and supported in their financial decisions. By receiving regular, tailored advice, clients can feel more confident that their investments are being managed in their best interests.
For clients, this means a more hands-on relationship with their advisers, fostering trust and ensuring that their financial plans are regularly updated to reflect any changes in their personal circumstances or the broader market environment. Engaging with advisers who adhere to these standards can provide peace of mind, knowing that one’s financial well-being is being actively monitored and managed.
It could be 10 years, not 5!
The case of Andrew Curtis, reported in the Times in June 2024, highlights the importance of understanding the fees associated with financial advice services and staying informed about your rights as a client. After paying approximately £10,000 over 13 years for annual advice reviews he never received, Curtis discovered he had been unknowingly charged for a service that was not delivered. His experience reflects a broader issue within SJP, which has set aside £426 million to compensate clients in similar situations. However, months after this provision was announced, no refunds have been issued, leaving clients like Curtis frustrated. This situation underscores the need for greater transparency in financial services and for clients to actively monitor their charges. If you suspect you’ve been paying for advice you haven’t received, remember that help is available—contacting your service provider and, if necessary, the Financial Ombudsman Service, can ensure your voice is heard and your case reviewed. Together, we can advocate for fair treatment and build a financial system that works for everyone.
It could be 20 years!!
In 2020, a Telegraph investigation exposed a case where an SJP client went 17 years without contact but continued to be charged a service fee. Despite such reports, SJP maintains that everything is above board. Yet preliminary findings suggest many clients received little to no service or were charged for vague, unsubstantiated “services.”
The estimated compensation bill? £426 million. This figure comes from a 2023 sample analysis, which revealed that 2% of clients’ ongoing advice fees had been charged without any corresponding advice service being provided. This calculation spans five years, going back to 2018, highlighting a significant issue in ensuring value for clients’ fees.
If we take this sample-based test at face value, it suggests that 196 out of 200 clients were not just invited to a review but actually received a relevant one. That means advisers would need to see around four clients a week. Considering the time required for preparation, travel, the review meeting, recommendations, documentation, and implementation, this would essentially be a full-time schedule, leaving little to no room for writing new business. Realistically, you know that’s simply not achievable, don’t you?
What percentage would you say, reasonably, were fee for no service? If it was 10%, the compensation figure would be five times larger. 20%, 10 times larger!
If the mass redress event was calculated on the full term of the problem, which we know from the evidence is 20 years, the compensation bill would increase by a factor of four.
But when you consider this spans two decades, and the practical realities of delivering “relevant” reviews, the true figure could be closer to £5- to £20- billion. This mirrors the infamous AMP scandal in Australia, where “fees for no service” led to a $5.8 billion fallout.
Will SJP be held accountable, or will the FCA’s focus on its secondary objective lead to a softened approach, glossing over the findings of the review and letting SJP off lightly?
When a judge rules that a transaction was illegal and in favour of the consumer, it’s clear that wrongdoing has occurred; essentially, money has been taken unfairly. So, is it right for the stolen money not to be returned to its rightful owner simply to protect the reputation of the party responsible? Surely, justice means ensuring that those wronged are made whole, regardless of how it reflects on the offender.
The Red Flags in FCA’s Defence
The FCA’s track record offers little reassurance. In the judicial review over the Interest Rate Hedging Products (IRHP) mis-selling scandal discussed in court last week, the FCA’s defence raised more questions than answers:
- The Swift Report: The FCA’s counsel argued that John Swift KC’s findings did not directly accuse the FCA of unlawful behaviour. The judge, however, highlighted that Swift’s term “arbitrary” was a legal synonym for “unlawful.”
- Evasive Evidence Handling: The FCA claimed it wasn’t required to provide clear evidence for rejecting Swift’s findings. Astonishingly, key decision-makers hadn’t even reviewed the referenced documents.
- Dubious Sophistication Criteria: The FCA used a size-based test to classify certain retail customers as “sophisticated,” freezing them out of redress. Critics argued this approach defied regulatory norms and fairness.
- Convenient Powerlessness: The FCA contended that in 2012, its enforcement powers were limited. This excuse conveniently ignored clear evidence of bank misconduct, including concealed charges and fraudulent practices.
The FCA’s evasive and inconsistent defence suggests a troubling pattern: prioritising banks over consumers and designing redress schemes that minimise liability rather than deliver justice.
Growth at Any Cost?
As the FCA navigates its post-growth objective era, transparency and consumer protection seem to be taking a back seat to “competitiveness” and “stability.”
The parallels with Australia’s ASIC’s fees-for-no-service project and the AMP collapse are unsettling. If the FCA continues to shield institutions like SJP under the guise of international competitiveness, are we witnessing the groundwork for a similar disaster in the UK? Or will the truth—like so many victims—be left to vanish into obscurity?
Where Do We Go From Here?
Victims deserve answers, and the public deserves a regulator that prioritises transparency and accountability. The FCA must be held to account, not just by the courts but by the people it claims to protect.
As a community, we can demand better by:
- Staying informed about regulatory developments.
- Supporting independent reviews and whistleblower protections.
- Pressuring policymakers to prioritise consumer rights over corporate interests.
Together, we can advocate for a fairer financial system that works for everyone—not just the giants.
Let’s not allow these injustices to be swept under the rug. The time for action is now.
Academy of Life Planning 
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