Rathbones Group (RAT) suffered a sharp sell-off this week, falling 18.9% to close at 1,598p on Friday after the wealth manager disclosed compliance shortcomings within its UK wealth management business and outlined measures to address them.
The decline followed the publication of a skilled person review, an independent assessment overseen by the Financial Conduct Authority, which identified areas for improvement in the firm’s implementation of Consumer Duty as well as aspects of its compliance, oversight and assurance arrangements.
Rathbones said it will undertake a two-year remediation programme to address the findings, with costs expected to total £60 million net of insurance recoveries. The company will also conduct a targeted review of certain clients to assess whether they received appropriate outcomes.
As part of the changes, Rathbones has paused the onboarding of new clients requiring enhanced due diligence for up to 12 months while it strengthens procedures and controls. The company said these clients generated around £370 million of gross inflows over the past year.
The group has also introduced a voluntary pause on inflows into general investment accounts from some existing enhanced due diligence clients until specific requirements are met.
Approximately 4,700 clients are affected, representing around 4% of Rathbones’ 119,000 clients. Gross inflows from these clients totalled approximately £530 million during the previous 12 months.
Alongside the remediation programme, Rathbones announced it will stop charging investment management fees on cash balances held within discretionary portfolios from 1 July. The change is expected to reduce underlying profit before tax by approximately £9 million in 2026.
Chief executive Jonathan Sorrell said the company remained committed to operating to the highest standards and that its strategy had not changed.
Rathbones also confirmed that its dividend policy remains unchanged and that a previously announced £20 million share buyback programme, which has received Prudential Regulation Authority approval, will begin shortly.
The review followed engagement with the FCA and comes as Rathbones pursues its ambition of becoming the UK’s leading wealth manager. Analysts at Peel Hunt retained their buy recommendation on the shares, arguing that the issues identified pre-date the appointment of Sorrell and his management team, while maintaining that the firm’s longer-term strategy remains intact.
Despite that support, investors reacted sharply to the combination of remediation costs, restrictions affecting certain client inflows and the expected impact on future profitability, sending Rathbones shares to their lowest level since May 2025.