Wealth manager and Financial Planner Rathbones Investment Management Limited (FRN 116316) has halted the onboarding of clients requiring enhanced due diligence (EDD) following a Consumer Duty-focused review which highlighted issues with some clients and how they were treated.
A 12 month pause in onboarding EDD clients has been introduced by Rathbones after a voluntary agreement with the FCA which has seen a skilled persons review carried out and other changes in the pipeline.
EDD clients are usually defined by the investment sector as those carrying potentially high risk, such as those in a prominent public position, such as high ranking politicians, those from riskier jurisdictions or those working in high risk industries or with complex and potentially opaque ownership structures behind them, where it may be difficult to identify the real client.
The group is also announcing a significant shake up of its wealth management business after Consumer Duty failings were found during the review. About 4,700 client are believed to be affected.
Among the actions are:
- addressing the findings of the review,
- reviewing the outcomes of a portion of clients,
- a voluntary pause on the acceptance of some clients's inflows into general investment accounts and
- axing, at least temporarily, charging investment management fees on cash balances held within clients’ discretionary portfolios from 1 July.
The review, which could take two years, will cost the firm at least £60m, it says, with underlying profit hit by an additional £9m.
Rathbones Investment Management trades under a number of names, including Rathbones Advice and Rathbones Financial Planning. It has rapidly expanded in recent years with a number of acquisitions (see below).
Under the FCA agreement, Rathbones said it has, “voluntarily agreed to pause the onboarding of new clients that require Enhanced Due Diligence (EDD clients) and to the acceptance of inflows into general investment accounts from some existing EDD clients.”
The agreement has been made under Section 55(L)(a) of the Financial Services and Markets Act (FSMA) and means Rathbones will need to halt new client onboarding of EDD clients until the review is completed.
Rathbones has confirmed that it has also undertaken a Skilled Person Review following discussions with the Financial Conduct Authority.
The company said in a statement: "The review has identified areas for improvement within the Group’s UK Wealth Management business regarding the implementation and embedding of Consumer Duty, as well as certain aspects of its compliance, oversight and assurance arrangements.
"The Group is undertaking the following actions:
- A programme of work addressing the recommendations from the review, which is expected to be conducted over a two-year period.
- A targeted review of a portion of our clients to assess whether they have received good outcomes.
- For a period of up to twelve months, a voluntary pause to the onboarding of new clients that require Enhanced Due Diligence (“EDD clients”) whilst the Group focuses on implementing changes to its procedures and controls. In the last twelve months, relevant gross inflows from EDD clients totalled approximately £370 million.
- A voluntary pause to the acceptance of inflows into general investment accounts from some existing EDD clients. The Group will work with these clients to meet certain requirements such that they are able to resume inflows as soon as practicable. This affects approximately 4,700, or 4%, of the Group’s 119,000 clients, and in the last twelve months, relevant gross inflows from these clients totalled approximately £530 million."
Rathbones group says the actions are expected to cost £60m, net of expected insurance recoveries, which will be recognised as non-underlying expenses over the next two years. The Group’s dividend policy remains unchanged and a previously announced £20 million share buyback programme, approved by the PRA, will get under way shortly.
Rathbones says that, in addition, the group is reviewing "certain aspects of its pricing" as part of its ongoing commitment to delivering fair value for clients. In the interim, the group intends to cease charging investment management fees on cash balances held within clients’ discretionary portfolios from 1 July. This is expected to impact underlying profit before tax by approximately £9 million for 2026.
Jonathan Sorrell, chief executive officer, 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. Our strategy is unchanged and we continue to make strong progress against the plan set out in February. I am grateful for the constructive engagement with the FCA, and the continued trust of our clients as we implement these improvements.”
Rathbones IM has expanded rapidly in recent years with numerous takeovers of small advice firms and some large ones. Last year the group completed a major merger with Investec Wealth & Investment (IW&I). The group also announced pre-tax profits in 2025 were up 53.5% to £152.9m. The company says the profit increase was driven by, ‘synergy delivery’ and higher average funds under management.
Funds under management and administration (FUMA) hit £115.6 billion as at 31 December 2025 (31 December 2024: £109.2 billion) helped in part by market recovery. Operating income rose to £923m (2024: £895.9m).
The FT has reported the halt of the onboarding of some new clients as being related to a skilled persons review at the firm. Rathbones share price has fallen by 15% over the past five days to 1,612.73 (as of Weds 17 June lunchtime).
• Editor's note: Story updated 19.06.26 to make clear the suspension of onboarding applies specifically to EDD clients. Additional details of EDD clients also added.