16th Jun 2026 08:30
(Alliance News) - Rathbones Group PLC on Tuesday warned of a profit hit as it has voluntarily halted new inflows from some existing high-risk clients until they "meet certain requirements".
The London-based investment and wealth manager outlined a series of moves after a skilled person review, which followed engagement with the UK Financial Conduct Authority. It expects a GBP60 million profit hit over the next two years.
Rathbones shares plunged 17% to 1,616.99 pence each in London on Tuesday morning following the announcement.
"The review has identified areas for improvement within the group's UK Wealth Management business regarding the implementation and embedding of consumer duty, as well as certain aspects of its compliance, oversight and assurance arrangements," Rathbones said.
Rathbones said it will undertake a "programme of work addressing the recommendations from the review". This is expected to be conducted over two years. It will also perform a targeted probe on a batch of its clients, "to assess whether they have received good outcomes".
In addition, it said: "For a period of up to twelve months, a voluntary pause to the onboarding of new clients that require enhanced due diligence whilst the group focuses on implementing changes to its procedures and controls."
Potential clients that need enhanced due diligence include those that are politically-exposed or a from higher risk nations. Rathbones said gross inflows from those EDD clients totalled around GBP370 million over the last 12 months.
According to the FCA, a skilled person review occurs when it is "concerned about aspects of a regulated firm's activities" or when the watchdog wants "further analysis".
Rathbones also announced a "voluntary pause" of new inflows into general investment accounts from some existing EDD clients.
"The group will work with these clients to meet certain requirements such that they are able to resume inflows as soon as practicable," it added.
This move affects 4,700 clients, around 4% across the group. In the last 12 months, inflows from these clients amounted to GBP530 million.
Rathbones said: "Related to these actions, the group expects to incur estimated costs of GBP60 million, net of expected insurance recoveries, which will be recognised as non-underlying expenses over the next two years. The group's dividend policy remains unchanged, and the previously announced GBP20 million share buyback programme, which has now been approved by the Prudential Regulation Authority, will commence shortly."
Finally, Rathbones said it will stop charging investment management fees on cash balances held within discretionary portfolios from the start of July.
"This is expected to impact underlying profit before tax by approximately GBP9 million for 2026," it said.
In 2025, the firm achieved underlying pretax profit of GBP238.1 million, up 4.6%. Statutory pretax profit shot up 54% to GBP152.9 million.
Separately, Rathones said it has named Angela Seymour-Jackson and Kathryn Purves as independent non-executive directors from October 1 and July 1, respectively.
The firm previously announced Sarah Gentleman, whose time on the board has exceeded nine years, will exit during the second half of the year. Seymour-Jackson will replace Gentleman as senior independent director.
Seymour-Jackson is currently chair of recruitment firm PageGroup PLC and sits on the boards of consumer review platform Trustpilot Group PLC and magazine publisher Future PLC as a non-executive director.
Purves has "expertise across investment management, wealth advisory, private equity-backed businesses, and risk and governance", Rathbones said. She has previously chaired the risk committee at private equity asset manager ICG PLC.
By Eric Cunha, Alliance News news editor
Comments and questions to [email protected]
Copyright 2026 Alliance News Ltd. All Rights Reserved.
Related Shares:
RathbonePageGroupTrustpilotFuture