St. James's Place Wealth Management Plc · DRN-5873129

The complaint Mr L complains that St. James's Place Wealth Management Plc (SJPWM) recommended investing in unsuitable funds, and failed to identify and react to poor fund performance as part of its ongoing wealth management service. What happened In late 2019 SJPWM met with Mr L and his wife – Mrs L. SJPWM provided combined advice to both Mr and Mrs L. SJPWM recommended that Individual Savings Accounts (ISAs) be set up for both Mr and Mrs L and that they contribute each of their annual allowances to those. SJPWM also recommended that their remaining available funds for investment be invested within a Unit Trust Feeder account held jointly. The latter was intended to feed the maximum annual ISA allowance into each of their ISAs in April each year, starting in April 2020. SJPWM assessed that Mr L had a medium attitude to risk and recommended a spread of investments, across a number of the SJP funds, in order to achieve a medium investment risk across the portfolio. Mr and Mrs L accepted SJPWM’s recommendation. A complaint was made to SJPWM in an email on 18 December 2023. The email was sent by Mr L but set out the issues of dissatisfaction with SJPWM’s advice regarding both his and Mrs L’s investments. The basis of the dissatisfaction was described as being with the following four funds that SJPWM had recommended for inclusion in their investment portfolios: • SJP Strategic Income • SJP Global Growth • SJP North American • SJP Greater European Prog Mr L explained that the loss incurred across these four funds was not consistent with what it was reasonable to expect of the medium risk investment profile that was agreed to. Mr L did not think it was fair that he and Mrs L bear the whole cost of the losses of those funds due to SJPWM’s errors. These errors were deemed to be the failure to originally invest based on the correct risk basis and then a failure to make changes to the portfolio as part of the ongoing check of viability. SJPWM responded to explain that it didn’t uphold Mr L’s complaint. It explained that investment performance was not guaranteed, and it didn’t agree that it should redress matters based on a premise that changing funds would have given an improved ISA performance. Mr L did not accept SJPWM’s response and referred the complaint to our service. Mr L similarly referred his wife’s complaint. These complaints have been recorded and responded to separately by our service because the ISAs are individually owned products. The basis of the complaints raised by both Mrs and Mr L separately are contextually the same. A point

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which Mr L confirmed to our service when explaining the issues were identical with only the sums invested by each differing. One of our investigators considered Mr L’s complaint and didn’t think that it should be upheld. He explained why he thought that the initial investment advice had been in line with Mr L’s agreed medium attitude to risk. And he thought that SJPWM acted reasonably in the way it provided its ongoing advice service. A second investigator separately considered Mrs L’s complaint and didn’t think that should be upheld for similar reasons. He considered that SJPWM’s initial recommendation had been suitable for Mrs L. He explained that SJPWM were not offering a discretionary fund management service so would only expect to see the circumstances being reviewed annually. So wouldn’t expect to see SJPWM recommending regular fund switches without a good reason to do so. He considered the funds that had been complained about and didn’t agree that there had been reasons for SJPWM to have recommended switches prior to Mr L doing so. So didn’t think that it was fair to suggest that Mrs L’s disappointment with the ISA performance was caused by any failing by SJPWM. Mr L didn’t agree with the opinion reached by our investigators and referred his complaint for an ombudsman’s decision. This decision relates to Mr L’s complaint. A second decision will be issued addressing Mrs L’s complaint, although the points of complaint are the same. 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. Mr L has seen and been able to comment on the view’s given in relation to both his and his wife’s complaints. Which, as he has explained, are based on the same points of complaint. In his view of Mrs L’s complaint, our investigator set out what I consider to be a detailed timeline of the circumstances. Whilst the conclusion that he reached has been challenged by Mr L (acting as Mrs L’s representative), the detail in that timeline was not disputed. So I have not gone into the same detail in my background of circumstances in either this or Mrs L’s decisions. Having considered the circumstances, for very similar reasons that our investigators have already given, my decision is to not uphold Mr L’s complaint. I will set out my reasons in what follows. These reasons are, unsurprisingly, the same as those that I have set out in Mrs L’s complaint. In deciding on a fair and reasonable outcome I take into account relevant laws and regulations as well as the regulator’s rules, guidance and standards. Where appropriate I also consider what was good industry practice. Of relevance here are the rules that the regulator – the Financial Conduct Authority – publish in its Handbook as the Conduct of Business Sourcebook (COBS). Chapter 9 of COBS specifically relates to the suitability of personal recommendations by advisers. And COBS 2.1 places an overarching duty on all regulated firms to act honestly, fairly and professionally in accordance with the best interests of its client. I would also point out that it is the role of our service to provide an alternative to the courts, for consumers to resolve disputes that they have with a regulated firm. We are set up to provide that alternative quickly and with a minimum of formality. What this means is that my decision will focus on the things that I consider are the crux of Mr L’s complaint. Where I have summarised the complaint in this decision, I have done so to help get to the heart of the issues in order to make the reasoning for my decision as clear as I can.

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The basis of Mr L’s complaint related specifically to the suitability of the above listed funds in the portfolio. But I note that, in response to our investigator’s view and follow up explanation, Mr L has said “I am formally maintaining my dispute on the grounds of lack of disclosure, failure of advice, and overall portfolio performance”. I would like to reassure Mr L that our service has an ‘inquisitorial remit’ when considering complaints. Which means that we are able to dig deeper into what has happened than may have been set out in the original complaint. And I think, from our investigators view, that he considered all of these issues in assessing SJPWMs advice and ongoing assessments. Even though I think that Mr L’s original dissatisfaction was with the funds Mr L had named. So here I am also considering the complaint in the same broad terms. The suitability of the selected funds for the ISA Here I am in agreement with the explanation that our investigators gave regarding the suitability of the recommended funds for Mr and Mrs L. SJPWM assessed Mr L as having a medium attitude to risk. This was explained and set out in the documentation that he was given. And I have not seen any dispute that was a fair assessment. So I think that it was appropriate for SJPWM to recommend a portfolio that reflected that level of risk. As a restricted adviser, SJPWM was only able to recommend funds from the list of SJP funds. However, there was a number of funds with differing mandates for the chosen fund managers to follow. Mr L was not advised to invest in a single medium risk fund, although that would likely have been managed to include a diversity of investment by the fund manager. Mr L was instead recommended to spread his investment across a number of different funds that were managed with different levels of exposure to different asset classes. The overall balance of the funds provided an overall medium level of investment risk, but additionally added greater diversity as the returns were not dependant on the performance of a single managed fund. Overall, the choice of funds was suitable for Mr L’s attitude to risk. Should periodic reviews have highlighted a need to switch funds? Mr L was paying SJPWM for an ongoing advice service. SJPWM provided its ‘Key Facts About Our Services and Costs’ document. This explained, ‘We will also provide you with ongoing advice to review your investment and ongoing contribution levels, if applicable, to ensure it remains appropriate as set out in the “Welcome to St. James’s Place” brochure…’ Within the suitability letter that SJPWM provided for Mr L it offered a further description of its service as, ‘You will receive regular review meetings to help you keep better track of your investment planning. Your funds will be reviewed at least annually, more frequently if required, and you will receive support and advice regarding any changes that may be beneficial.’ In circumstances such as this, where advice fees are being taken each year, I think it would be fair to expect SJPWM to be in contact with Mr L each year to review his circumstances. This should include a check on whether his personal circumstances had changed and whether the product and investments were still suitable for his circumstances. The evidence that SJPWM has provided shows a history of contact between it and Mr and Mrs L about their combined investments. That history of contact was summarised in detail in

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our investigator’s view of Mrs L’s complaint and I am satisfied that it is an accurate summary so am not repeating it here. Mr L’s adviser was not monitoring the performance of his portfolio on a daily, weekly or monthly basis. And I would not expect an adviser to do this unless they had specifically indicated that they would. That’s because it is more normally the role of the adviser to put in place a suitable investment strategy. In this case that meant putting the funds in the hands of different fund managers. It is then the job of the fund managers to achieve the best fund performance they can within the mandate for their managed funds. Overall, given the frequency of contact between SJPWM and Mr and Mrs L in the time they were its clients, I am satisfied that it was providing the ongoing advisory service that it had agreed to. In making this decision I have given consideration to whether or not an outcome of that service should have been SJPWM recommending fund switches from any specific funds due to performance. I will now explain why I don’t think that is a fair or reasonable criticism of its service. SJPWM had put in place an investment strategy that I have already said was broadly in line with Mr L’s medium attitude to investment risk. It did not guarantee any specific returns, and neither did it guarantee that any fund losses would be limited to a certain amount. That initial investment strategy doesn’t become unsuitable because it went on to provide investment returns that Mr L was not satisfied with. I have also considered Mr L’s argument that SJPWM were in some way negligent in failing to recommend a switch from underperforming funds. I set out above the funds that Mr L specifically highlighted based on his assessment of their performance. I have seen that Mr L queried the performance with SJPWM and it recommended against coming out of the funds whilst the unit prices were depressed. This was a reasonable response given Mr L’s objective for capital growth over the medium to long term. I don’t think it was acting contrary to Mr L’s best interests. Again, it is worth noting that it is not the role of the adviser to try to predict future fund performance. Its recommendation was therefore reasonable given the fact that Mr L’s circumstances and objectives were not changed. He had time for the fund’s performance to improve. I have considered Mr L’s specific argument that SJPWM should have reacted to St James’s Place’s Assessment of Value (AoV) statements that it provided for its range of funds. These were assessments that the regulator required fund management firms to carry out from late 2019. St James’s Place published its first set of AoVs in April 2020. Which was after the original advice that SJPWM gave to Mr L so it would not be reasonable to say that they could have influenced any fund selection at the time of advice. The AoVs produce an assessment of the funds using a traffic light system with green indicating good value, amber indicating a fund that is broadly delivering value, and red indicating a fund being on a watchlist (with areas identified which challenged whether value is being delivered, and specific actions taken or under consideration). In the first of these assessments in 2020 the funds that Mr L specifically queried for suitability were all given a green light in the AoV. They were all assessed as green again in April 2021. By April 2022 the following had been assessed as amber: Greater European Prog, North American, Strategic Income. It was only by April 2023 that any of the funds that Mr L raised concern about were indicated as being ‘red’ and on the watchlist for value. The regulator’s intention for AoVs was to increase accountability for fund managers and allow investors to make informed decisions. But it was also intended to prompt fund managers to identify corrective action where a fund was failing to provide value. So I don’t

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think that an adviser need necessarily recommend coming out of a fund, at a possibly low value, on the back of a single red light assessment. I can understand why Mr L reacted in the way he did to the performance and information that he had. But that doesn’t necessarily mean that SJPWM need also to have made the same recommendation. The funds in question remained aligned to Mr L’s attitude to risk. And appearing on a watchlist in 2023 didn’t mean that long term performance, and value, of the fund would not be addressed as a result of being given a ‘red’ AoV rating. Having considered Mr L’s complaint, I do not think that it is fair and reasonable to uphold it. I think that the original advice met his requirements and put in place a portfolio that aligned with his agreed attitude to risk. These investments were held during difficult times for investment markets, spanning the covid 19 outbreak and global conflicts all of which negatively impacted investment values. In order to uphold this complaint I would need to be persuaded that SJPWM failed, in some way, to respond to something obvious that made the existing investments unsuitable. And I don’t agree that was the case. SJPWM explained to Mr L that switching around funds based on recent fund performance risked crystallising the losses made on funds that had dropped. Which I think was reasonable and in line with its duty to act in Mr L’s best interests. The fact that Mr L’s portfolio was spread across a number of funds spread his risk of such losses and it was not unreasonable to continue with the strategy given that the investment was intended to produce capital growth in the medium to long term. My final decision For the above reasons, I am not upholding Mr L’s complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr L to accept or reject my decision before 22 April 2026. Gary Lane Ombudsman

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