Rathbones, a prominent wealth manager, has announced it is suspending investments from high-risk clients and ceasing to accept new ones following a review initiated by the UK's financial watchdog. The company's shares plummeted by approximately 16% after it disclosed that the necessary changes would cost an estimated £60 million.
Review Findings and Actions
Rathbones informed investors that it is addressing the findings of an independent review commissioned by the Financial Conduct Authority (FCA). The company anticipates a two-year program to implement recommendations aimed at improving its UK wealth management operations.
For up to a year, Rathbones will voluntarily pause onboarding new clients requiring enhanced due diligence—more rigorous background checks for higher-risk customers or payments. Some existing clients in this category will also be unable to deposit money into investment accounts until they meet specific requirements.
Financial Impact
Higher-risk clients represent roughly 4% of Rathbones' 119,000-strong customer base and generated inflows of about £530 million over the past year. The company estimates incurring £60 million in costs due to these actions. Additionally, it will suspend investment management fees from July 1, reducing underlying pre-tax profits by approximately £9 million for 2026.
Consumer Duty Compliance
Part of the review examined how Rathbones integrates the Consumer Duty into its UK wealth management business. The FCA oversees this duty, which mandates that financial firms prioritize customer interests. The review also identified areas for improvement in compliance controls and oversight.
Chief Executive Jonathan Sorrell stated: "We are committed to operating to the highest standards on behalf of our clients. The work we are undertaking will support and accelerate our vision to be the best wealth manager in the UK, by far."
