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AMC Claims
The UK’s £620bn wealth management industry faces a reckoning after the FCA wrote to 20 of the UK’s largest wealth managers who offer advisory services as part of a crackdown on excessive fees and poor practice within the industry.
St James’s Place, the UK’s largest and most notable wealth manager, said in February that it had taken a £426mn provision to cover thousands of compensation claims. Quilter, another major wealth adviser who has previously had to deal with issues relating to historic pension transfer advice given by companies it now owns, also admitted it might need to set aside cash for similar claims.
Consumers often pay wealth managers a range of fees, with an annual fee – called the “all-inclusive” fee in the case of St James’s Place clients – that covers various things, including a meeting with their financial adviser to discuss their investments and overall position, known as an ongoing service. In many instances, these meetings didn’t happen or weren’t logged, meaning wealth managers cannot prove it took place or measure the outcome following the provision of advice.
Wealth managers have cashed in during recent years, particularly as low interest rates and lockdowns left wealthier consumers with significant disposable income and needing advice on what to do with their cash. However, following hot on the heels of the introduction of the Consumer Duty in summer 2023, these latest revelations could see significant redress payments being paid out by wealth managers in the coming years.
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