Shares in St James's Place PLC (LSE:STJ) ricocheted sharply lower then higher after the UK's largest wealth manager announced changes to how it charges customers for investment bonds and pensions to make the fees more transparent and competitive.
The changes, including no longer charging early withdrawal fees, will cost the FTSE 100-listed company £140-160 million before tax, mostly in 2024, and profit margin from mature funds under management is expected to reduce from a range of 0.54-0.56% to 0.43-0.45%.
It will also reduce underlying cash levels for "the next few years", due to the removal of initial product charges across all product wrappers, but directors expect cash growth to recover to "a more positive trajectory into the next decade and beyond".
City watchdog the Financial Conduct Authority (FCA) has been pressing the firm to align its fees with the new "consumer duty" regulations, introduced in July, aimed at ensuring companies act in the best interests of their customers.
All charges for ISAs, SIPPs and other 'wrappers' will now also be disclosed individually rather than on the all-inclusive basis as they currently do.
Charges will also be "rebalanced towards the value of advice", with all products' initial product charges to be removed and with ongoing product charges reduced and tiered for large investments.
From 2024 fund charges will change to a "more consistent approach" reflecting the value each fund provides, so some charges are expected to decrease and others increase, but with an average neutral effect across the whole portfolio.
The shares fell almost 5% in early trade before rebounding to 686.6p, a rise of 2.1% in the first hour of trading.