St James's Place swings to loss as it sets aside £426m for client refunds

(Sharecast News) - Wealth manager St James's Place said on Wednesday that it swung to a full-year loss as it cut its dividend and set aside £426m for potential client refunds. In the year to the end of December 2023, the company swung to an IFRS loss after tax of £9.9m from a profit of £407.2m the year before.

The firm posted a post-tax cash result of £68.7m, down from £410.1m a year earlier, as it took a significant hit from a one-off ongoing service evidence provision of £426m "for potential client refunds linked to the historic evidencing and delivery of ongoing servicing".

STJ declared a final dividend of 8p a share, down from 37.19p in 2022, giving a full-year dividend of 23.83p a share, versus 52.78p a year earlier.

It also changed its future dividend guidance, saying that going forward, it will pay 50% of the full-year underlying cash result.

Net inflows for the year came in at £5.12bn and funds under management rose to £168.2bn from £148.3bn at the end of 2022.

Chief executive Mark FitzPatrick said the company had undertaken an assessment into the evidencing and delivery of historic ongoing servicing following a significant increase in client complaints, particularly in the latter part of 2023.

"The assessment revealed that our evidence of ongoing client servicing was less complete in the years preceding investment into our Salesforce CRM system in 2021, and we have therefore made a provision for potential client refunds to address this. Looking forward, the investment we've made into Salesforce means we are confident this is a historic issue," he said.

"While our financial results have been significantly impacted by this legacy matter, the board recognises the importance of returns to shareholders and is confident that sufficient capital and liquidity is available to deal with the financial impact of the provision."

He added: "Once our new charging structure is fully embedded, we anticipate that the business will be on an improving earnings trajectory during 2027 and beyond."