FCA fines Neil Woodford and firm £46m over failed fund

The Financial Conduct Authority (FCA) has fined former fund manager Neil Woodford and his company Woodford Investment Management (WIM) nearly £46m for failings in the handling of the Woodford Equity Income Fund (WEIF).

The regulator said Woodford would face a penalty of £5.9m and a ban on managing retail funds or holding senior manager roles. WIM has been fined £40m. Both have referred the FCA’s decision notices to the Upper Tribunal, meaning the findings are provisional until the cases are heard.

The WEIF, managed by Woodford and WIM, was suspended in June 2019 after its value fell from more than £10bn in May 2017 to £3.6bn. The suspension left thousands of retail investors unable to access their money.

The FCA found that between July 2018 and June 2019, Woodford and WIM made “unreasonable and inappropriate” investment decisions by selling liquid assets and buying less liquid ones. At the point of suspension, only 8% of the fund’s investments could be sold within seven days, despite rules requiring access within four days.

The regulator said Woodford failed to oversee the fund’s liquidity management or WIM’s relationship with its authorised corporate director, Link Fund Solutions, even after concerns were raised. It concluded he held a “defective and unreasonably narrow” view of his responsibilities.

Steve Smart, joint executive director of enforcement and market oversight at the FCA, said: “Being a leader in financial services comes with responsibilities as well as profile. Mr Woodford simply doesn’t accept he had any role in managing the liquidity of the fund.

“The very minimum investors should expect is those managing their money make sensible decisions and take their senior role seriously. Neither Neil Woodford nor Woodford Investment Management did so, putting at risk the money people had entrusted them with.”

In 2023, the FCA announced a £230m redress scheme for investors affected by the WEIF’s suspension, following its findings against Link.