Rathbones Group Shares Slide After UK FCA Review Triggers GBP60 Million Remedial Program
Shares of Rathbones Group (RAT.L) fell sharply on Tuesday morning in London after the wealth manager disclosed that it expects to incur 60 million pounds sterling in additional costs to address compliance-related shortcomings identified in a regulatory review.The so-called skilled person review, prompted by the UK's Financial Conduct Authority, uncovered issues within the group's UK wealth management business. According to a same-day filing, the areas requiring improvement included the implementation and embedding of consumer duty, as well as certain aspects of the firm's compliance, oversight and assurance arrangements, according to a same-day filing.The company's shares were down more than 16% in early morning trading.To rectify these issues, Rathbones will launch a two-year remediation program expected to cost 60 million pounds, net of insurance recoveries. The firm said its dividend and stock buyback policies will remain unchanged.As part of the program, the company will suspend onboarding of enhanced due diligence clients for up to 12 months while it strengthens its procedures and controls. Over the past 12 months, the gross inflow from such clients totaled 370 million pounds.Rathbones will also temporarily restrict inflows into general investment accounts from some of these existing clients until certain requirements are met. The affected clients represent 4% of its customer base and contributed gross inflows of 530 million pounds in the last 12 months.Separately, the investment manager will also cease charging investment management fees on cash balances held within clients' discretionary portfolios, starting July 1. The company expects this change to result in a 9 million-pound impact on its full-year 2026 underlying profit before tax.Rathbones Chief Executive Jonathan Sorrell said, "The work we are undertaking will support and accelerate our vision to be the best wealth manager in the UK, by far. Our strategy is unchanged and we continue to make strong progress against the plan set out in February."
