After St James’s Place announced last month that it would have to set aside £426 million to repay customers who had paid for annual reports and then not received them, all eyes turned to Quilter as the next victim.

In Quilter’s 2023 results published this month, the company announced that it had been contacted by the Financial Conduct Authority and was now in the process of reviewing its past practices and data.

There are widespread fears in the industry that the Consumer Tax could be a death blow for the largest asset managers, particularly after Phoenix Group announced this week that it would set aside £70 million in advance of the Consumer Tax due to come into force later this year.

However, Liberum analysts James Allen and Nick Anderson argued that fears that Quilter would have to expect a huge severance package were exaggerated.

The analysts explained that Quilter’s consultant base is about a third of SJP’s and Quilter’s ongoing service fees are around 20 percent lower than SJP’s. This would mean that a £426 million payout for SJP would only mean around £115 million for Quilter.

Given that Quilter had a net cash balance of £349 million at the end of 2023, the repayment would be more than affordable for them.

“This scenario assumes that the problems are as widespread as at St. James, which we doubt, and that Quilter does not seek repayments from its advisers who would be responsible for any shortcomings in customer service,” Allen and Anderson said.

Yesterday, the FCA published an investigation into retirement income advice, finding that in 2022, only 2.9 percent of clients of 231 advice firms had paid for ongoing advice but had not received it.

“If the FCA’s survey is representative of what Quilter’s own internal review might reveal, any determination could turn out to be a rounding error,” the analysts said.

Allen and Anderson noted that each of Quilter’s companies has had a system of record in place “for a long time” so they can track which customers received which services, while SJP only began implementing Salesforce in 2021.

Quilter now regularly audits its consultants by conducting random assessments of ongoing consultations, meaning that any consultant found not to be following the rules would have already been subject to disciplinary action.

Finally, the analysts pointed out that a key reason why SJP was targeted in the first place was the high number of complaints it received from the FCA, while Quilter received comparatively few complaints.