Citi has slashed ratings across the gamut of UK wealth-management stocks in the wake of new consumer duty regulations that took effect on July 31.
Under new City rules, companies must utilise fair value assessments for on-sale tools and services, ensuring alignment with customer benefits and Financial Conduct Authority requirements.
According to the FCA, “the consumer duty will set higher and clearer standards of consumer protection across financial services and require firms to act to deliver good outcomes for customers”.
These new regulations have already taken what Citi analysts have called a ”high-profile scalp”: Mid-cap wealth manager St James’s Place.
Associated fee cuts, alongside weak flows, drove St James’s Place shares down 20%, while Citi has warned of further exposure to Hargreaves Lansdown PLC (LSE:HL.), Jupiter and Quilter, all of which have been shot down to a sell rating.
Hargreaves Lansdown shares have been kicked down 10% over the past five trading days, while Quilter is down nearly 12%.
Jupiter has fared slightly better, dipping around 3% in the same period.