Customers seeking compensation from wealth manager St James’s Place (SJP) could face soaring legal fees costing them thousands of pounds.
AMK Legal, which represents about 19,000 SJP clients, will take a 40 per cent cut of the compensation from successful cases on top of VAT, its website states.
As a result, compensated customers will pay nearly half – 48 per cent – to the law firm and the taxman.
An example on AMK’s website is of a customer receiving £10,000 compensation who would net £5,200 after fees and tax.
The charge exceeds the 30 per cent fee cap imposed on claims management companies in 2022 by the City watchdog the Financial Conduct Authority (FCA).
Payouts: AMK Legal, which represents around 19,000 St James’s Place clients, has said it will take a 40% cut of the compensation received from successful cases on top of VAT
Under the rules, they can charge up to 30 per cent on the first £1,499 of compensation excluding VAT. This then falls to 15 per cent on anything over £50,000.
But AMK Legal is not a claims management company and is exempt from the fee cap.
It follows a warning from the FCA last month that SJP customers should avoid using intermediaries to extract compensation, saying SJP would contact them directly.
SJP, Britain’s largest wealth manager, stunned investors last month by setting aside £426million for potential refunds following customer complaints about inadequate levels of service.
The shares fell and are down 31 per cent this year.
It then emerged that as many as 100,000 customers could be in line for a refund for annual reviews they never received.
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