In November the UK’s Financial Conduct Authority (FCA) published final rules on an incoming cap on exit fees on pensions.
From 31 March 2017, early exit charges will be capped at 1% of the value of a member’s benefits taken, converted or transferred from a scheme by anyone aged 55 and over.
SJP, a ‘restricted’ advice group, currently charges a withdrawal fee of 6% if a client withdraws from their investment in the first year. This falls by 1% every year for six years.
The company, which currently works with 3,000 advisers in the UK and has a big presence in Asia, has publicly claimed that since its charges are based on the duration the investment is held, not the age of the investor, it will not be hit by the cap.
When contacted for comment, a spokesperson for SJP told International Adviser: “SJP is fully compliant with the rules.”
In November, SJP said it has doubled the number of advisers in Asia as it moves from servicing expats and looks to target the region’s high net-worth individuals (HNWIs), according to Mike Gravestock, partnership director for Asia and international.
Under fire
However, SJP’s “loophole” on exit fees has come under scrutiny in an article in The Sunday Times, which highlights the number of SJP client cases where investors hit out at the exit charges.
In one case, retired solicitor Arnold Rosen said he found it impossible to understand what he was charged by SJP between 2009 and 2015 on his £280,000 investment, which he earmarked for retirement.
The Sunday Times investigation found that although Rosen’s fund grew from £280,000 (€320,329, $341,012) to £391,490 over the six-year period, he paid a total of £36,119 over that time or 35% of the investment growth.
Another SJP client, who wished to remain anonymous, faced an exit fee of almost £20,000 to leave the company as despite the firm’s six-year rule, if a client adds money to their savings, the clock is reset on the additional contributions.
