Consumer magazine Which? has produced a mystery shopping report in which it accuses advisors at St James' Place, the wealth management advisory giant, of misleading customers about charges.

The magazine's investigators went undercover to find out whether the firm's advisors were being open with potential customers and found them wanting. It held meetings with 12 arbitrarily chosen advisors at which it says it "found some advisers misleading potential customers about the nature of their services, which are limited compared to those offered by independent financial advisors [IFAs]."

The report says that despite SJP claiming to offer a “unique proposition,” its services are very expensive with 5% upfront costs being the norm. It believes that these are 40% higher than the typical price for advice from an IFA. It also says that five of the advisors made great play of SJP’s ‘unique guarantee,’ which it found disappointingly irrelevant. This guarantee, according to Which?, is merely a statement that SJP will provide 'redress' to any customer whose SJP advisor gives faulty advice - something that every firm is obliged to do by the regulatory in any case. It adds: "In reality, the only time the SJP guarantee would be worth anything would be if the individual adviser went bust, or ceased trading."

The Which? investigators were interested in the advisors' claims about charges, and the clarity with which they told consumers that they were not IFAs, "which means they’ll only recommend products where they get paid a commission – even if cheaper, more suitable options are freely available." On the first subject, they found the SJP website to display the right figures but in inconvenient places. Four of the 12 advisors, they said, went into no detail about likely costs at all, accusing them of going against the Financial Conduct Authority’s guidelines for advisors. In other cases, Which? says that it found discrepancies between the figures that the advisors were giving. Only seven advisors, it says, mentioned the fact that SJP levies annual fees. It accused one of talking 'nonsense.'

Regulations, according to Which?, state that advisors should tell potential customers about charges both in writing and verbally, adding that four did not. Another section of the magazine's investigation is called "SJP advisers aren’t IFAs – but why does that matter?" Its reply is that only IFAs put the interests of customers first. It adds that the Retail Distribution Review of 2012 dicates that financial advisors in the UK have to explain whether they offer restricted or independent advice, but three of the SJP people did not. It also says that SJP told it that it did not believe that 'being restricted' was in any way inferior to 'being independent,' adding that SJP's paperwork tells a different story.

The magazine concedes that many SJP customers are happy with the service but decries their high initial charges. It has shared its findings with the FCA.

By way of reply, David Bellamy, the chief executive of St James’ Place, told Compliance Matters in a relayed statement: “St. James’ Place offers high quality, face-to-face, financial advice, evidenced by 98% of clients who said our services represent reasonable, good or excellent value-for-money – with 81% good or excellent. Our advisers are committed to putting clients’ interests first and we will continue to provide the excellent service to clients that has underpinned our growth over the past 25 years.”