Rathbones, one of Britain’s largest wealth managers, is undergoing a Financial Conduct Authority (FCA) review that has triggered concern among investors and analysts, raising questions about the firm’s future and potential takeover prospects. The FCA’s intervention follows a firm-wide assessment of compliance with new consumer duty rules introduced in 2023.

The FCA initiated a “skilled-person review” of Rathbones’ procedures in September 2025, which uncovered issues requiring up to two years to resolve. As a result, Rathbones has temporarily halted accepting new clients requiring enhanced due diligence (EDD), referring to those linked to politically exposed persons or individuals with unexpected wealth. The firm also stopped charging fees on cash balances for these existing clients. Rathbones reported that about 4,700 clients fell under the EDD category, representing roughly £900 million of funds in the past year, equating to around 4% of its total business.

This development follows a period of optimism for Rathbones. In February 2026, chairman Clive Bannister highlighted the company’s strong market position, with assets under management having grown tenfold over recent decades to £113 billion. At the same time, CEO Jonathan Sorrell expressed confidence, emphasizing the company’s growth potential targeting an affluent market estimated at three million individuals. However, shares plunged nearly 20% following the FCA announcement, with the firm’s market capitalization dropping from about £2.4 billion to £1.5 billion within days.

Industry analysts view the regulator’s findings as a significant setback. David McCann of Deutsche Numis described the situation as an “unwelcome development,” fueling speculation that Rathbones, which has expanded largely through acquisitions since its founding in 1742, could now become a takeover target. Analyst Ben Bathurst of Royal Bank of Canada noted that the negative market reaction might attract interest from competitors or private equity firms, especially in a crowded wealth management sector marked by numerous private equity-backed players and a surplus of sellers.

Despite the challenges, Rathbones maintains its financial stability and has not altered its dividend policy. A company source indicated that the FCA’s review was part of a broader industry-wide consumer duty assessment. Rathbones declined to specify whether the regulatory issues were linked to its recent strategic changes or leadership. Peel Hunt analyst Rae Maile suggested that the concerns predate the current executive team led by Sorrell.

Rathbones services around 119,000 customers, with a majority holding assets between £1 million and £5 million. With 3,500 employees, the company remains a key player in the UK wealth management sector. Investors and observers will be closely watching Rathbones’ response to the FCA findings and its ability to refocus growth efforts without diverting attention during this compliance challenge.