Rathbones Group has recorded net outflows of nearly £1bn in the first half of 2026 as the wealth manager grapples with the consequences of a Financial Conduct Authority investigation into its operations.
The FTSE 250 firm revealed it will absorb significant costs following a skilled person review conducted by the FCA, which identified compliance shortcomings within the business.
Costs from the regulatory review have already reached £19m and are now expected to climb to a total of £60m as remediation work continues.
Among those costs is the ceasing of fees charged on the cash elements of client portfolios, a move anticipated to reduce income and operating profit by £9m over the period.
Chief executive Jonathan Sorrell said: “Our regulatory programme to address the recommendations from the FCA skilled person review has remained a key priority.”
Sorrell added: “Six weeks on, we have made good initial progress, client reaction has been supportive and resilient, and our focus remains firmly on our long-term ambition to become the best wealth manager in the UK, by far.”
The group’s asset management arm continued to struggle against industry-wide pressure on active equity strategies, contributing to outflows of £0.4bn in the second quarter.
Its wealth management channel recorded net inflows of £0.4bn in the second quarter, while the discretionary and management channel attracted a further £0.5bn during the same period.
Those inflows offset net outflows of £0.4bn recorded in the first quarter, resulting in what the group described as “broadly neutral net flows” in wealth management across the first half of the year overall.
Despite the significant regulatory burden, funds under management and administration rose 10.7 per cent year on year to £120.7bn, up from £109bn in the prior year.
Profit before tax increased 15.7 per cent to £72.1m, compared with £62.3m in the equivalent period, reflecting underlying business momentum even amid the compliance costs.
Acquisition and integration costs linked to Investec Wealth and Investment continued to decline, falling to £9.5m from £23.2m the previous year as the business moved beyond the active acquisition phase.
The group also completed its £50m share buyback programme during the period, and raised its interim dividend to 3.2p per share from 3.0p previously.