Rathbones Group Plc (LSE:RAT) said it will introduce a series of operational and compliance enhancements after completing a Skilled Person Review conducted following discussions with the Financial Conduct Authority.
The review identified areas for improvement within the company’s UK Wealth Management division, particularly relating to Consumer Duty requirements and aspects of its compliance and oversight framework.
Two-Year Improvement Programme Planned
The wealth manager said it will implement a comprehensive programme over the next two years to address the review’s findings and strengthen its internal controls.
As part of the process, Rathbones will also carry out a targeted assessment of selected client relationships to determine whether customers have received appropriate outcomes in line with Consumer Duty expectations.
New Restrictions for Enhanced Due Diligence Clients
While the remediation programme is underway, the company will temporarily suspend the onboarding of new clients requiring Enhanced Due Diligence for a period of up to 12 months.
Rathbones said these clients generated approximately £370 million of gross inflows during the past year.
The group will also temporarily stop accepting additional inflows into general investment accounts from certain existing Enhanced Due Diligence clients. The measure affects around 4,700 clients, representing approximately 4% of Rathbones’ total client base of 119,000.
Gross inflows from these affected clients amounted to roughly £530 million over the last 12 months. The company said it will work closely with clients to satisfy the relevant requirements and enable inflows to resume.
£60 Million Cost Expected
Rathbones expects the review and remediation programme to result in costs of approximately £60 million, net of anticipated insurance recoveries.
These expenses will be recognised as non-underlying items over the next two years as the company implements the required changes.
Dividend and Buyback Plans Remain Intact
Despite the additional costs, Rathbones confirmed that its dividend policy remains unchanged.
The company also said its previously announced £20 million share buyback programme has now received approval from the Prudential Regulation Authority and is expected to commence shortly.
Fee Changes to Support Client Value
Separately, Rathbones announced changes to its charging structure as part of its ongoing focus on delivering fair value to clients.
From July 1, the group will no longer charge investment management fees on cash balances held within discretionary portfolios. Management expects the move to reduce underlying profit before tax by approximately £9 million during 2026.
Management Maintains Strategic Focus
Chief Executive Officer Jonathan Sorrell said the actions being taken are designed to strengthen the business and support its long-term ambitions.
He added that the company’s strategic direction remains unchanged and that Rathbones continues to make progress against the objectives outlined earlier this year, with the goal of becoming the leading wealth manager in the UK.
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