St. James's Place Wealth Management Plc · DRN-6253190

The complaint Mr C complains that St. James's Place Wealth Management Plc (“SJP”) has unfairly deducted an Early Withdrawal Charge (“EWC”) from his pension savings when they were transferred to another provider. What happened I issued a provisional decision on this complaint last month. In that decision I explained why I didn’t think the complaint should be upheld. Both parties have received a copy of the provisional decision but, for completeness, I include some extracts from it below. In my decision I said; I have seen that Mr C has also said that an EWC was unfairly deducted when his ISA savings were transferred to another provider. And Mr C’s wife has also complained about EWCs that were deducted from her pension and ISA savings around the same time. But this complaint, and hence my findings in this decision, only relate to what happened when Mr C’s pension savings were transferred. I will deal with what happened when Mr C’s wife’s pension savings were transferred in a separate decision. But should either Mr C or his wife wish to complain about the EWC applied to their ISA they would need to make an additional complaint, initially to SJP and then referring it to us if matters remain unresolved. And given the similarities of their complaints I am sure Mr C and his wife will understand why large parts of my decisions on each case follow the same logic. Mr C held pension savings with SJP. Those pension savings had been transferred to SJP from another provider in 2019. As part of its advice relating to that transfer SJP told Mr C that his pension savings might be subject to an EWC if they were transferred to a different provider. Mr C was told that the EWC would be 5.85% in the first year, and that the charge would reduce by 1% per annum. Mr C asked SJP to transfer his pension savings to another provider in October 2024. At the time of that request SJP says that Mr C’s pension savings were valued at £2,800,892.08. But it deducted an EWC of £23,807.58 (0.85%) meaning that £2,777,084.50 was transferred to the new provider. Mr C complained that the deduction of the EWC was unfair. SJP didn’t agree with Mr C’s complaint. It said that the information it had given to Mr C at the time he transferred his pension savings in to SJP had been clear, and that the information had explained that an EWC would be charged if the monies were moved away from SJP in the early years. Unhappy with that response Mr C brought his complaint to us. As my starting point when considering this complaint I looked at the information Mr C had been given in 2019 that set out the operation of the EWC. The information contained in the advice report SJP provided explained that the pension plan being recommended to him included an EWC. And it set out both the starting point for the EWC and how it would reduce each year, until it was extinguished by year six.

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So I’m satisfied that – when Mr C transferred his pension savings to SJP, he was made aware of the EWC and when and how it would apply. I note he signed to say he accepted the information he’d been given. I think the explanation was clear and SJP confirmed that the EWC would apply within the first six years if Mr C wanted to transfer his pension away. And since SJP has confirmed that the only way that the initial charge could be taken was to spread it over the first six years – it has said there were no other options – I think it’s fair and reasonable for it to apply the charge in order to obtain the fees it expected to make as its compensation for the advice it gave on setting up the plan in 2019. But Mr C has referred to the FCA guidelines around early exit charges and says that, as he thinks SJP’s EWC is an ‘exit charge’, those guidelines should apply here. Mr C is correct that in 2017 the FCA, building on its treating customers fairly principles, introduced a restriction on early exit charges. The Conduct of Business Sourcebook (COBS) 19.6A confirms the regulation in relation to a member joining or incrementing benefits under a pension scheme on or after 31 March 2017. It says Restriction on early exit charges on a member joining or incrementing benefits under a scheme on or after 31 March 2017. (1) A firm must not: (a) impose; or (b) include in the arrangements relating to a personal pension scheme or stakeholder pension scheme any provision for the imposition of an early exit charge on a member of the scheme. (2) This rule applies in relation to a member who entered into a contract or other arrangement on or after 31 March 2017 providing for: (a) a right to benefits resulting from contributions to the scheme; or (b) an increment to benefits resulting from contributions to the scheme, but only in respect of the member’s benefits under that contract or other arrangement. But in this case I don’t agree that SJP’s EWC is an early exit charge as described above. I think an early exit charge is designed to cover any penalties that might be imposed purely at the time a customer wants to transfer or draw their benefits. SJP’s EWC wasn’t defined in that way as it was clearly explained as a charge that would be imposed for the loss of fees it had already earned but not received. SJP explained its initial advice charge was to “cover all of our expenses incurred in providing, checking and guaranteeing the suitability of your advice”. I think SJP carried out those tasks when it set up the plan but it didn’t take all its charges for that work at once – it spread them over the first six years of the term of the plan. SJP has explained that this was to help the investment growth of the plan. It isn’t for me to comment on such commercial decisions that a business may make – but I would expect SJP to have explained the effect of this decision. And I think it did that – as confirmed above – when it stated how it would recover those charges – within the first six years, using the EWC. So I think there is a distinct difference between the two charges here. I think the early exit charge is designed to compensate a provider for the work it might have to do in transferring, converting or paying out a customer’s pension benefits. Whereas the EWC is a charge to cover services that have already been carried out – but where the full initial cost of the work involved hasn’t been taken. In this case the EWC

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ensured those costs could be recouped later on if Mr C decided to transfer his pension savings within the six year period. So I don’t currently think SJP has done anything wrong and I think it was entitled to charge the EWC when Mr C decided to transfer his benefits elsewhere. I won’t be asking SJP to remove the charge in line with the FCA’s guidelines on early exit charges because I don’t think those apply here. I invited both parties to provide us with any further comments or evidence in response to my provisional decision. SJP hasn’t provided us with anything further. Mr C has asked his financial advisor, at the firm to which he transferred his pension savings in 2024, to respond on his behalf. Although here I am only summarising what Mr C’s financial advisor has said I want to reassure them both that I have read, and carefully considered, the full response. Mr C’s financial advisor notes that he previously advised Mr C about his pension savings when he was working for SJP. He says that Mr C chose to move his pension savings to the new firm so that he could continue to receive advice from his financial advisor when he left SJP. The financial advisor says that he is surprised that SJP didn’t waive the EWC given how close Mr C was to its endpoint. And the financial advisor says he is aware of other consumers in similar situations to Mr C who have benefitted from SJP waiving the fee so the rules are not being applied consistently. What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. As I set out in my provisional decision, in deciding this complaint I’ve taken into account the law, any relevant regulatory rules and good industry practice at the time. I have also carefully considered the submissions that have been made by Mr C and by SJP. Where the evidence is unclear, or there are conflicts, I have made my decision based on the balance of probabilities. In other words I have looked at what evidence we do have, and the surrounding circumstances, to help me decide what I think is more likely to, or should, have happened. And I repeat my reflections on the role of this service. This service isn’t intended to regulate or punish businesses for their conduct – that is the role of the Financial Conduct Authority. Instead this service looks to resolve individual complaints between a consumer and a business. Should we decide that something has gone wrong we would ask the business to put things right by placing the consumer, as far as is possible, in the position they would have been if the problem hadn’t occurred. I’ve thought carefully about what Mr C’s financial advisor has said in response to my provisional decision. Those comments have not caused me to alter the conclusions I previously reached on this complaint. But I would like to comment further on some of the matters he raised. I think Mr C retaining the same financial advisor strengthens my conclusion that he should have been aware of the impact of the EWC, both at the time he transferred his pension savings to SJP, and when making the decision to move them to the new firm. The financial advisor who would have advised Mr C on the most recent transfer would have been responsible for setting the EWC in 2019.

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In deciding this complaint I am tasked to determine my outcome based only on the merits of this case. I have no reason to doubt what Mr C’s financial advisor has said – that on occasion SJP has chosen to waive the EWC that it might ordinarily have applied. But I have no knowledge of any circumstances in which that decision might have been taken. And I don’t think that, what is essentially a gesture of goodwill in waiving the EWC, should confer any right for Mr C to expect the same treatment. I also accept that Mr C was very close to the end of the six year period for which the EWC applied. That is why the initial rate of 5.85% had reduced to the rate that Mr C was actually charged of 0.85%. But it is clear that he was still within the period covered by the EWC, albeit at a reduced rate, and so it was entirely reasonable for SJP to deduct the charge from Mr C’s transfer. Had Mr C wanted to avoid paying the charge he would have needed to leave his pension savings with SJP for a further four months. There was no entitlement for the EWC to be tapered further in the final year – the 0.85% that Mr C had agreed to pay would remain until the end of the six-year period. So I remain of the view that SJP hasn’t done anything wrong and I think it was entitled to charge the EWC when Mr C decided to transfer his benefits elsewhere. I won’t be asking SJP to remove the charge in line with the FCA’s guidelines on early exit charges because I don’t think those apply here. My final decision For the reasons given above, and in my provisional decision, I don’t uphold the complaint or make any award against St. James's Place Wealth Management Plc. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr C to accept or reject my decision before 23 April 2026. Paul Reilly Ombudsman

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