The FCA has issued a warning notice to Neil Woodford along with its preliminary findings into Woodford Fund Management.
There are tough words exchanged between the regulator and the fund manager's lawyers.
The FCA said Woodford held “a defective and unreasonably narrow understanding of his responsibilities for managing the WEIF’s liquidity risks”, while also claiming that he had failed to ensure the company had appropriate liquidity when making investment decisions as the Guardian and Thisismoney, among most trades, investment websites and national papers, reported.
Woodford himself looks set to mount (or continue to mount may be more accurate) a robust defence.
Indeed lawyers WilmerHale and BCLP, legal counsel to Woodford and WIM, said: “The FCA alleges that WIM and Mr Woodford failed to act with due skill, care and diligence during the 11 months from 31 July 2018 to 3 June 2019, when Link decided to suspend the fund.
“It is striking that the FCA’s only criticisms of Neil Woodford relate to his involvement in matters relating to the fund’s liquidity framework, which was, in fact, Link’s responsibility and supervised by the depositary (the depositary is responsible for the safekeeping of the fund’s assets and for overseeing the fund’s authorised corporate director) and the FCA.”
In a separate and final notice to Link Fund Solutions (LFS), the FCA said LFS had “failed to act with due skill, care and diligence in its management”. It also stated that it failed to manage the liquidity of the fund and ensure that concerns about the liquidity position were acted upon.
The FCA says a fine of £50m could be levied in this case, but would eat into the compensation Link is paying to investors so it will not be levied.
Link has emphasised that it would have defended itself from the FCA assertions had it not agreed a conditional settlement with the regulator.
Your reviewer has views on the matter but suffice to say responsibility is often very difficult to establish in absolute terms particularly in light of investor stampedes for the exit and decisions about suspensions that may or may become permanent.
Time periods are also often pretty fundamental in deciding what went wrong.
One question – are they still remaining implications for advisers and distributors or will this now rumble on as a Woodford v FCA dispute through the Regulatory Decisions Committee and perhaps inevitably reaching the Upper Tribunal?
In other news, SJP is working with the CII to offer empathy training. The Vulnerability VR empathy training programme is aimed at enhancing advisers’ awareness of interacting with clients in vulnerable situations, particularly in the light of consumer duty requirements, reports FTAdviser.
Quite a scoop here. The DWP is reviewing the £30,000 advice requirement for defined benefit (DB) pension transfers, with one source saying it may be increased to £100,000.
The £30,000 limit, which has been in place since pension freedoms were introduced in 2015, means anyone wishing to transfer a DB pension above this value must receive financial advice from a regulated financial adviser.
Excellent scoop from New Model Adviser again.
