Proactive Investors - St. James’s Place PLC (LON:SJP) slashed its dividend for last year and the next three years as it swung to a loss last year as it made a £426 million provision made for potential client refunds after a recent telling-off by the regulator.
The UK's largest wealth manager reported a £9.9 million loss after tax compared to a £407.2 million profit a year earlier.
Taking the £426 million provision follows a "significant increase" in complaints, particularly in the latter part of last year, which the FTSE 100-listed company said was "mostly linked to the delivery of ongoing servicing", with servicing of ongoing clients "less complete" in the years before it started using a Salesforce CRM system in 2021.
This has significantly impacted the final dividend, which was chopped to 8p per share from 37.2p last time, meaning the full-year dividend will total 23.83p compared to 52.78p a year ago.
Furthermore, due to changes announced last year to its fee structure, future payouts will also be limited, the company warned, with total annual shareholder distributions to be set at 50% of the full year underlying cash result.
For 2024, 2025 and 2026 the annual payout will be fixed at 18p per share, with the balance of distributions delivered through share repurchases.
“As earnings trajectory improves during FY2027 and beyond, anticipate capacity to grow dividend proportion of total shareholder distributions,” SJP said, with this revised approach balancing “the need to retain investment for growth while recognising the importance of returns to shareholders”.
Back in October, the company announced changes to its customer fee structure for investment bonds and pensions to make the fees more transparent and competitive, after pressure from the Financial Conduct Authority on the firm to align its fees with the new "consumer duty" regulations introduced in July, which aim at ensuring companies act in the best interests of their customers.
SJP's changes, including no longer charging early withdrawal fees, will cost it £140-160 million before tax, mostly in 2024, with profit margin from mature funds under management expected to be squeezed too.