St James’s Place tanks as a trio of warnings rock the stock market

ST JAMES’S Place (SJP) yesterday lost nearly a fifth of its value amid a flurry of dismal FTSE trading updates that sent shockwaves through the City.

Shares in the FTSE 100 wealth manager tumbled by as much as third – wiping £1bn off its value – after it set aside £426m to cover the cost of mounting customer complaints and slashed its dividend.

The stock closed 18.6pc, or 115.2p, lower at 505.8p. It comes days after the death of the company’s founder, Lord Jacob Rothschild.

SJP was not the only blue-chip company to suffer a frenzied sell-off yesterday, with consumer goods giant Reckitt plunging by 13.3pc after its sales fell short of expectations.

The grim updates helped drag the FTSE 100 down by 58 points, or 0.8pc.

Halfords, a household name firm outside the top-flight, was also caught up in the carnage with the bicycle-to-carparts retailer veering 27pc lower after a profit warning.

SJP was dumped by investors after chief executive Mark FitzPatrick revealed a ‘significant increase in complaints, particularly in the latter part of 2023’ over services customers claim not to have received.

‘We’ve taken this very seriously and where gaps in record-keeping mean that there is a lack of evidence of the delivery of ongoing servicing, we’ve refunded these charges,’ he said.

The company said that following its investment in a new IT system in 2021 this was now a ‘historic issue’.

It is now reviewing customer records going back to 2018.

It said that it had ‘engaged extensively’ with the Financial Conduct Authority (FCA), the City watchdog.

The £426m set aside for refunds dragged SJP to a £4.5m loss.

‘We recognise that this is a disappointing outcome for everyone,’ FitzPatrick said.

The final dividend was slashed by more than three-quarters to 8p and it warned payouts would continue at a lower level than before for three years as it shifts to a new charging structure and sees an expected decrease in profit growth.

FitzPatrick added: ‘In the nearterm, we expect the industry outlook to remain challenging given the pressures that clients continue to face.’ High inflation and rising interest rates as well as global conflict and political instability left clients needing to pull out their money over a ‘challenging’ 2023.

The group is under growing scrutiny from the FCA, which last year introduced a new ‘consumer duty’ to stop customers being ripped off.

In October it succumbed to pressure to overhaul some punitive customer charges – one of the reasons behind its lower profit outlook.

And FitzPatrick said investors would have to wait some time before an improvement.

‘Once our new charging structure is fully embedded, we anticipate that the business will be on an improving trajectory during 2027 and beyond,’ he said.

But he said underlying performance had been ‘robust in what has been a very difficult external environment’ and as it faced ‘important historic challenges’.

Fitzpatrick added: ‘ We are working hard to put these challenges behind us so that we can move forward with confidence as we plot our path to 2030.’

Analysts at Jefferies voiced fears that its latest issues could worsen. ‘Complaints increased in the second half of 2023, and there may be concerns that more will come in,’ they said.