Wealth manager Rathbones has said it is halting investments from high-risk clients and stopping taking on new ones following a review prompted by the UK’s financial watchdog.
Shares in the company fell by around 16% after revealing it is having to make changes that will cost an estimated £60 million.
Rathbones told investors that it was putting in work to address the findings of an independent review commissioned by the Financial Conduct Authority (FCA).
It is expected to take two years to carry out a programme of work addressing recommendations to make improvements to its UK wealth management business.
For a period of up to a year, the company said it was voluntarily pausing the onboarding of new clients that require “enhanced due diligence” – meaning more rigorous background checks for customers or payments that are considered to be higher risk.
Some existing clients within this bracket will also not be able to put money into investment accounts until they meet certain requirements, Rathbones said.
It is estimated that these higher-risk clients make up about 4% of the group’s 119,000-strong customer base, and have generated inflows of about £530 million in the past year.
Rathbones estimates that it will incur costs of about £60 million as a result of the actions.
It will also pause investment management fees from July 1, which is set to knock about £9 million off underlying pre-tax profits for 2026.
Part of the review looked into how Rathbones was embedding the Consumer Duty into the UK wealth management business.
The FCA oversees the Consumer Duty, which requires financial firms to put customers at the heart of what they do.
The review also uncovered certain aspects of its compliance controls and oversight that needed to be improved.
Chief executive Jonathan Sorrell said: “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.”
