River and Mercantile has set aside £1m through a reduction in director pay in response to the a recent FCA competition investigation.
In its half-year update, the firm has also issued a statement on the recent departure of his high profile fund manager Philip Rodrigs.
Following the FCA investigation on a breach of competition law issued in November, R&M says there were a “number of uncertainties” around the final outcome of the probe but has decided to make the provision after taking advice, 50 per cent of which has been funded by a reduction in the directors’ variable remuneration.
R&M chairman Jonathan Dawson says: “While the outcome for the previously announced FCA competition matter is still uncertain, the board believes that it is prudent to recognise a provision together with a reduction in variable remuneration expense.”
R&M reassured investors it has put in place improved systems and controls following the FCA probe.
In separate comment, R&M chief executive Mike Faulkner addressed the recent departure of Philip Rodrigs.
Faulkner says the fund manager’s departure has been well received by clients but stressed on the fact that this did not represented a cultural issue at the firm.
He says:”Every business will suffer issues such as these, even great firms. The test of a business is not its avoidance of them – which is impossible – but rather the way it navigates them when they arrive…
“We take our culture and conduct very seriously. It is critical in a business model where we are focused on helping clients fully understand their needs and then solving them. As a result, when we encounter threats to these areas our approach is to deal with them decisively and openly.
“This is important in a business that is based on openness and transparency with its clients and its people. But a consequence of this approach is that it is very clear to everyone when an issue has arisen. There is little we can do about this – the alternative is far worse for the long term success of the business.”
The firm reported a fall in pre-tax profits to £11m in the second half of the year, down from £16.4m in the first half of the year. However, profits were still up by 28 per cent year-on-year. In the six months to December, the firm saw net inflows of £800m.