Rathbones is facing a significant setback after an independent skilled person review, carried out following engagement with the Financial Conduct Authority, identified compliance shortcomings in its UK wealth management business. As a result, the FTSE 250 wealth manager will suspend contributions from thousands of clients and begin a two-year remediation programme to address the review’s recommendations.
The company said it will stop taking on new enhanced due diligence clients for the next year. These are Rathbones’ higher-risk customers, and they generated about £370 million in gross inflows over the past year. In a further restriction, inflows into general investment accounts from around 4,700 of these clients will also be paused. Those accounts accounted for roughly £530 million in gross inflows last year.
The measures are expected to cost Rathbones about £60 million. The group said its shareholder dividend will remain unchanged, and its £20 million share buyback programme is set to start shortly. Rathbones also announced it will stop charging investment management fees on cash balances held within discretionary portfolios from July 1, a move it estimates will reduce pre-tax profit by about £9 million this year.
Chief executive Jonathan Sorrell said the company remains committed to high standards for clients and that the work now under way will support its goal of becoming the best wealth manager in the UK. He said the group’s strategy remains unchanged and thanked the FCA for its constructive engagement, as well as clients for their continued trust during the improvement process.
The market reacted sharply to the announcement. Rathbones’ shares fell 16.1% in early trading to 1,636.7p, leaving the stock down 13.4% since the start of the year. The selloff reflected investor concern over the scale of the restrictions and their likely effect on future growth.
The decision is seen as a possible blow to Sorrell, who took over as chief executive in August 2025, and to Rathbones’ wider ambitions. Earlier this year, after its 2025 full-year results in February, the company said it aimed to become the country’s leading wealth manager and the first choice for clients and employees. Sorrell has also highlighted artificial intelligence as a tool that can help advisers spend more time on client relationships.
Group finance director Iain Hooley said at the time that Rathbones wanted to attract older clients to benefit from the expected intergenerational transfer of wealth. Analysts at Panmure Liberum said the firm now needs to stay focused on building and maintaining client relationships to support growth.
The review and the resulting controls underline the pressure on Rathbones to strengthen compliance while protecting its long-term reputation and expansion plans.
