James Hay Partnership, part of the IFG Group, is a self-invested personal pension (SIPP) provider with decades of experience in the UK’s retirement savings sector. The firm claims to have managed over £25 billion in client funds across both SIPP and investment portfolios. However, the business has run into trouble in recent years with significant profit losses and pending penalties from HM Revenue & Customs (HMRC).
Spokespeople for James Hay have repeatedly blamed the slowdown in defined benefit (DB) or final salary pension transfer activity for poor revenue performance, and while the firm’s profitability has experienced a recent upswing, their SIPP client growth has fallen by 20%. This calls into question James Hay’s long-term stability, with the threat of an HMRC tax bill of more than £20 million and a slew of DB pension transfer claims still hanging over the firm.
What’s Happened to James Hay?
In March 2017, James Hay cited changing pension regulations and rising interest rates as the reason for overhauling their charging structures. This involved an increase in annual investment charges and a decrease to administration fees. The cost change for clients largely depended on the value of their SIPP plan and the nature of the services they were using.
Barely a month later, James Hay announced that HMRC was investigating the firm’s involvement with the unregulated biofuel investment Elysian Fields. The scheme became infamous for attracting millions of pounds from high profile investors, such as current Newcastle United manager Rafa Benitez, and retail investors alike. James Hay acknowledged that it was facing an initial tax bill of £1.8 million for the tax years 2011 – 2013. In a market statement last year, the firm claimed:
‘The maximum potential sanction charge which may be assessed by HMRC against James Hay for the overall 2011 – 2015 period would be approximately £20 million.’
The current chief executive of the IFG Group recently announced that resolving the ongoing dispute between HMRC and James Hay is a priority for the entire organisation. She claimed that HMRC has been unable to provide further clarity as to the potential cost of their eventual bill, influencing IFG Group’s decision to set aside an additional £0.5 million towards resolving legacy issues such as Elysian Fields investments.
This tumultuous situation forced the firm to an operating loss of £2.3 million for the 2017 financial year. IFG Group’s exceptional costs, such as financial redress for clients that lost money through the Elysian Fields scheme, rose to £8.8 million for the year.
James Hay’s revenue has recovered during the first half of 2018, with the firm marketing profits of £3.4 million. This is largely attributed to increased administration charges that have been put in place to combat the loss of growth in the DB pension transfer sector. The firm acknowledged that it is retaining significant costs in relation to the HMRC review, which they believe is unlikely to complete before mid-2019.
James Hay Compensation with Money and Me Claims
James Hay’s involvement with the infamous Elysian Fields scheme has cost both the firm and its clients a substantial amount of money. Many UK-based pensioners were saddled with illiquid investments that gradually reduced or eradicated their retirement savings entirely. Several individuals have already escalated complaints against James Hay to the Financial Ombudsman Service, where considerations will be made for awarding claimants compensation due to financial mis-selling.
Money and Me Claims is responsible for a number of these claims. We believe that we are the right people to help you seek financial redress if you have been mis-sold a SIPP product with James Hay. Contact us if you would like any more information.