Quilter sets aside £76 million pounds for customer compensation costs set to impact profits by £60 million pounds

Quilter, one of the UK’s leading wealth management firms, has allocated £76 million to cover compensation costs for clients who paid for financial advice they did not receive. The FTSE 250 company revealed the provision in its annual results and confirmed this step was necessary following an ongoing review into its advisory services from 2018 to 2023. This decision pushed the firm to a £60 million pre-tax loss for 2024, a sharp contrast to the £12 million profit it recorded the previous year.

According to Quilter, the provision represents a “reasonable estimate” of the financial redress likely to be incurred, although it warned that the final cost may change as the review progresses. The Financial Conduct Authority (FCA) formally intervened in the investigation in April last year, adding regulatory scrutiny to the matter. The £76 million includes client refunds, accrued interest, and administrative expenses related to the compensation process.

Despite this setback, Quilter’s adjusted pre-tax profits—its preferred yardstick for measuring performance—rose by 17 per cent to £196 million in 2024. The company also highlighted progress in its broader cost-cutting efforts, achieving £35 million of its targeted £50 million in savings by the end of the financial year.

Quilter’s review reportedly identified “limited cases” where clients were not provided with the advisory services they had been billed for. Steven Levin, the firm’s chief executive, emphasised that the number of complaints received remains low. He described the provision as “absolutely manageable” given the company’s financial position and anticipates filing a final report with regulators before the end of June 2025.

The business intends to recover redress costs from advisers found to have underperformed. This approach underscores Quilter’s commitment to reinforcing accountability across its 1,400-strong network of self-employed advisers, who cater to clients with investable assets of at least £50,000. As of December 2024, Quilter was managing assets worth £119.4 billion, representing a 12 per cent increase year-on-year.

Quilter is not alone in tackling compensation challenges in the sector. St James’s Place, the UK’s largest wealth manager, has earmarked £426 million to compensate clients for similar issues. Analysts have praised Quilter’s approach, with adjustments and provisions significantly lower than some predicted, but the final resolution will remain under scrutiny until the FCA review concludes.