Quilter, which manages £107bn of client money, last week confirmed it was a recipient of the FCA letter and admitted it could face “remedial costs”. However, the company said it was too early to tell how bad it would get.
Chief executive Steven Levin told The Telegraph Quilter is still at the early stages of establishing the facts, but has promised to “put right” anything found to have gone awry.
“It’s an area where we just want to make sure that we can demonstrate that we’ve done everything in the right way,” he says. “If there are any things that are wrong, then we’ll put them right.”
Analysts at Citi have speculated that the crisis could cost Quilter the equivalent of 4pc of its market cap, equivalent to around £56m. Shares have fallen more than 5pc over the last month.
Levin stresses that his company is “at the start of the journey” when it comes to estimating provisions.
“SJP clearly have been in much deeper dialogue on this for a longer period of time but the FCA has written to the industry,” he says. “It will probably become an ongoing dialogue over time.”
Many wealth managers are no longer listed on the UK stock market after a string of them were snapped up and the FCA has not revealed which firms it has written to, meaning finding out how far the problems spread is difficult.
Rathbones, which manages £61bn, says it is not facing any of the remediation issues. However, Paul Stockton, the company’s chief executive, says the wealth management sector is under renewed scrutiny more broadly.
The FCA is “going to be looking for consumer harm and act on it, so I don’t think that’s going anyway soon,” he says.
The City watchdog is currently reviewing the data obtained from its questionnaire, having set a deadline of February 27 for responses.
Industry analysts warn that the FCA risks doing more harm than good if it is too zealous in prosecuting its case.
The demand to record and log all interactions with clients may push smaller players into the arms of bigger managers such as Quilter and SJP. That would mean less choice for customers.
Some have speculated that the regulator’s intervention may be a tactic to stamp out the practice of ongoing advice. If so, this risks scaring providers away from offering advice altogether.
“There’s a difficult balance for a regulator because they’ve got to make sure that they don’t put too much pressure on the sector because then you drive out advice,” says Duncan. “Advice has proved to be valuable for customers as well.”
Whatever happens, the glory days for City managers look to be over. The hard yards are ahead.