Rathbones Group Plc said on Tuesday that it has completed a Skilled Person Review carried out after discussions with the Financial Conduct Authority. The review highlighted areas in the company’s UK Wealth Management business that need improvement, specifically around the implementation of Consumer Duty and a range of compliance and oversight arrangements.
To address the review’s findings, Rathbones will roll out a program of remedial work spanning two years. As part of that program the firm will perform a targeted review of a subset of clients to determine whether they received appropriate outcomes under the firm’s existing arrangements.
Operationally, Rathbones will pause onboarding of new clients who require Enhanced Due Diligence - a freeze that may last for up to 12 months while procedures and controls are updated. The company reported that gross inflows from new clients in this category amounted to approximately £370 million over the past 12 months.
In addition, the firm will temporarily stop accepting inflows into general investment accounts from some existing clients who are subject to Enhanced Due Diligence. That measure affects roughly 4,700 clients, representing about 4% of the group’s total client base of 119,000. Gross inflows from those affected clients were approximately £530 million in the last 12 months. Rathbones said it will engage with impacted clients to help them meet the necessary requirements so their inflows can resume.
Financially, the company expects to record non-underlying expenses of £60 million over the next two years, net of anticipated insurance recoveries. Rathbones stated that this charge will be booked as non-underlying costs in its accounts.
The firm confirmed that its dividend policy remains unchanged despite the remediation program. Separately, the company said the previously announced £20 million share buyback has now received approval from the Prudential Regulation Authority and will commence shortly.
Rathbones also said it is reviewing certain pricing elements as part of its commitment to delivering fair value for clients. A specific change will take effect on July 1, when the company will stop levying investment management fees on cash balances held inside clients’ discretionary portfolios. Management estimates that this adjustment will reduce underlying profit before tax by around £9 million for 2026.
Chief Executive Officer Jonathan Sorrell described the remediation work as supportive of the company’s objective to be the best wealth manager in the UK. The company said its overall strategy remains unchanged and that it continues to make progress against the plan it disclosed in February.
Summary of actions and financial impacts
- Completion of Skilled Person Review prompted by discussions with the FCA, with findings focused on Consumer Duty and compliance arrangements.
- A two-year remediation program and a targeted client outcomes review will be implemented.
- Onboarding of new clients requiring Enhanced Due Diligence will be paused for up to 12 months; gross inflows from such clients were about £370 million in the past year.
- Inflows into general investment accounts from some existing Enhanced Due Diligence clients will be paused, affecting roughly 4,700 clients (4% of 119,000); gross inflows from these clients were about £530 million in the last 12 months.
- Rathbones expects to incur £60 million of non-underlying costs, net of insurance recoveries, over two years.
- Dividend policy remains unchanged and a £20 million buyback approved by the PRA will begin shortly.
- From July 1 the firm will stop charging investment management fees on cash within discretionary portfolios, reducing underlying pre-tax profit by about £9 million for 2026.