Rathbones says FCA probe remains 'priority' as H1 outflows near £1bn

(Sharecast News) - Investment and wealth manager Rathbones reported an increase in first-half profits after funds under management and administration rose by over a tenth year-on-year, though net ouflows reached nearly �1bn.

Underlying pre-tax profit for the six months to 30 June totalled �123.2m, up 14% from the year before, with operating income rising to �487.5m from �449.1m.

FUMA grew by 11% to �121bn. In the second quarter alone, net flows were flat over last year, but for the half the firm recorded net outflows of �0.9bn.

Looking ahead, however, Rathbones said that second-half trading will be affected by the cost of the ongoing investigation raised by the Financial Conduct Authority about certain compliance issues - namely the cessation of charging fees on the cash element of portfolios which will hit margins. As a result, the fourth-quarter operating margin target has been lowered to 28.7% from 30.0.

In June, the company announced that it would halt some client onboarding and temporarily stop taking on high-risk clients that need enhanced due diligence as a result of the probe.

"Since our announcement on 16 June, our regulatory programme to address the recommendations from the FCA Skilled Person Review has remained a key priority," said boss Jonathan Sorrell.

"We are approaching this work with rigour, urgency and transparency as we address the findings and deliver the agreed programme of work. 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 stock was down 1.2% at 1,698.01 by 1019 BST.

See the latest RNS on Investegate.