Rathbones Group has announced a skilled person review, following engagement with the FCA (Financial Conduct Authority), the firm announced earlier this week.
According to the regulator, a skilled person review is conducted when it is concerned about “aspects of a regulated firm’s activities or wants further analysis”. Rathbones said that as part of the review, it expects to incur an estimated cost of £60m over the next two years.
As part of the consultation, Rathbones has opted to pause onboarding of new clients that require enhanced due diligence (EDD), a group who contributed £370m in gross inflows over the past 12 months.
On top of this, the firm has also stopped accepting inflows into general investment accounts from some existing EDD clients (approximately 4% of the group’s clients), representing £530m gross inflows.
It undertakes a programme of work to address recommendations from the key person review, expected to take place over two years, as well as a targeted review to see if clients have received good outcomes.
In addition, while the firm reviews its pricing, Rathbones will halt charging investment management fees on cash balances held within portfolios from 1 July. This is expected to impact pre-tax profits by almost £9m this year.
Following the news, Rathbones’ share price dropped about 17% over the course of the day.
Jonathan Sorrell, CEO at Rathbones, said: “We are committed to operating to the highest standards on behalf of our clients.
“I am grateful for the constructive engagement with the FCA, and the continued trust of our clients as we implement these improvements.”
