“There is significant uncertainty about the outcome of the FCA's review, and the timing, scope and quantum of any potential financial impact on the group cannot be reliably estimated at present,” the group said in a trading update on Thursday.

“The group will not pay any dividends on its ordinary shares for the current financial year, and the reinstatement of dividends in the 2025 financial year and beyond will be reviewed once the FCA has concluded its process and any financial consequences for the group have been assessed,” Close Brothers continued.

In accordance with the accounting standards, the board concluded that it is currently not required to recognise a provision in the group's half-year 2024 results in relation to this.

“Our business continues to perform well, and we are confident in the strength of our business franchise,” the group said. “Our banking division continues to deliver disciplined growth at strong margins and stable credit performance, and generated approximately £112 million of adjusted operating profit (AOP) for the six months to the end of January 2024.” 

In particular, Close Brothers Asset Management delivered strong annualised net inflows of 9 per cent and Winterflood remains well placed for a recovery in investor confidence. The group expects to report overall group AOP of about £94 million, after group net expenses, and said it has a strong capital, funding and liquidity position.

In addition, the board is implementing a range of actions to accrete capital including optimising risk weighted assets and it is continuing to deliver its cost management initiatives, the firm said.

The board said it is confident that these actions will build the firm’s capital strength, leaving it in a position to support its customers and protect its franchise. The firm will provide a further update at its half-year 2024 results, due out in March.