Martin Vander Weyer Martin Vander Weyer

Here comes the next mis-selling scandal

Alamy

St James’s Place is a posh London cul-de-sac that will forever be associated with the late Jacob Rothschild, who based his financial empire there and restored the stately Spencer House across the road. One of his enterprises, J. Rothschild Assurance, was renamed St James’s Place Capital in 1997 and ended up majority owned by Lloyds Banking Group – until Lloyds sold it to stockmarket investors in 2013. Combining fund management, financial advice and life insurance, SJP (as it’s known) joined the FTSE 100 a year later.

Though its headquarters are now in Cirencester, the poshness of its name and origin helped polish SJP’s upmarket cachet. But not any more: faced with a tidal wave of complaints about opaque fee structures and poor service – accompanied by lurid tales of luxury cruises and other perks for sales staff – SJP shares have fallen by two-thirds in the past two years. The Financial Conduct Authority has been pressing for internal reform, while a £426 million provision for potential refunds to clients pushed the group into a pre-tax loss for 2023.

SJP’s embarrassment has been a long time coming: the Sunday Times has been on its case for the past seven years. But the question that now arises is how many other wealth managers have been overcharging for poor or inadequate advice, while stuffing clients’ savings into computer-generated portfolios that at best barely track the relevant indices. And how many of those ill-served clients will now resort to heavily advertised ‘claims management’ cowboys in the vain hope of securing Lottery-win compensation?

Recent ‘Consumer Duty’ regulations oblige wealth managers to show more transparent value for money in their services. But the plain fact is that middle-class, middle-aged folk worried about financial security in retirement have become a soft target in a growth market populated by smooth-talking competitors. And it may be too late to avert another ‘mis-selling scandal’ – followed by yet another slump in financial consumer confidence.

Hot punt or safe haven?

The price of gold has reached a new high above $2,100 an ounce as US Treasury yields fall and investors expect interest rate cuts before mid-year – the underlying principle being that ‘zero-yielding’ assets such as gold start to look more attractive as returns on money and bonds fall. Plus there’s the ‘safe haven’ factor: Vladimir Putin’s belligerence, the Palestinian powder keg and a year of unpredictable elections everywhere are apparently provoking investors to increase the proportion of portable precious metal in their portfolios – while the price is underpinned by big buying from China.

All of which makes traditional sense if you worry about the state of the world and want to keep something of perpetual value under your bed. And then there’s bitcoin, reported this week to be ‘barrelling back towards its all-time high of $69,000’. That’s from a low of $16,500 in late 2022 and it’s partly for the same reasons as the gold surge; partly because the advent of bitcoin ETFs (exchange traded funds that make it easier to acquire crypto exposure) has been pulling in record volumes of new money and mopping up bitcoin supply; partly because a ‘halving event’ built into the cryptocurrency’s algorithm is about to slow the rate at which new bitcoins enter the market.

Confused by that last bit? Me too. Frankly, the whole damned thing’s a mystery. But back in January an analyst at Standard Chartered declared that: ‘If ETF-related inflows materialise as we expect, we think an end-2025 level closer to $200,000 is possible.’ So if you’re hot for a punt, go bitcoin; but if you’re anxious for a safe haven, go for gold.

Chips for sale

The UK’s largest microchip plant, you might recall, is a relatively modest compound employing 500 people on an industrial estate outside Newport in South Wales. Previously known as Nexperia Newport, it was owned by the Dutch subsidiary of a Chinese company, Wingtech, until the UK government used the 2021 National Security and Investment Act to force a sale. Now approval has been given for its £144 million acquisition by Pennsylvania-based and New York-listed Vishay Intertechnology. So – alongside Arm, the Cambridge chip designer that chose to list on Nasdaq – what little we have by way of a microchip industry has effectively all gone to America.

New life needed

It always seemed odd that the Levelling Up Secretary Michael Gove took such a strong stance against Marks & Spencer’s plan to demolish its flagship Oxford Street store and rebuild on the site. Now a High Court judge has ruled that in blocking the scheme Gove misapplied planning law and failed to offer  adequate reasons why his decision would not cause wider harm, given the dire state of Europe’s most famous retail boulevard, with its boarded-up shops (42 of 269 premises were empty at the time of the planning inquiry) and plague of candy stores.

The argument was partly about heritage, partly about carbon footprint – though M&S claims its new-build would score top marks for energy efficiency. The store group’s chief executive, Stuart Machin, called Gove’s decision ‘playing to the gallery’ and threatened to abandon the site altogether; one of his colleagues added that the inconsistency of intervening on this scheme but not on others with weaker cases would ‘lead many developers to ask “Why bother?”, which is a disaster for the economy’.

Who’s right? There are pros and cons but I’m with M&S: Oxford Street really does need new life. If Gove isn’t too abashed by the judge’s rebuke, I suggest he turns his attention a mile eastwards where, on the site of a former Travelodge in Museum Street, Camden council has approved a charmless 19-storey tower that will loom over Bloomsbury, out of scale with all around it. Call that one in, minister, and I think you’ll find almost everyone’s on your side.

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