FCA mulls disciplinary action as Woodford probe nears conclusion

The Financial Conduct Authority is now considering whether disciplinary action needs to be taken against individuals involved in the scandal that led to the collapse of Neil Woodford’s flagship Equity Income fund.

In a 15 December letter to Mel Stride, chair of the UK parliament’s Treasury Select Committee, the regulator said it has now gathered all the key evidence after a two-and-a-half year probe into the matter.

“We are now finalising our legal analysis with a view to making decisions as to whether to take action and, if so, what action should be taken and against whom,” FCA chief executive Nikhil Rathi wrote in the letter.

He added: “If any disciplinary action is taken, in the interests of fairness, we will be unable to identify who
it is against and what the allegations are until certain stages have been completed.”

The FCA has come under mounting pressure to provide an update on its probe into the Woodford fund collapse, with calls made for the investigation to be handed to an independent inquiry as a result of the time it has taken.

READ Woodford fund collapse widens Kent County Council loss to £84m

The suspension of Woodford’s Equity Income fund on 3 June 2019, prompted by Kent County Council’s request to pull its £240m, left more than 300,000 retail investors trapped and unable to access their savings in the £3.7bn vehicle.

An investigation was launched by the FCA in the same month to look into the circumstances leading up to the suspension of the fund, which held more than £10bn in assets at its peak.

Rathi had previously written to Stride in May 2021, informing the committee that it hoped to complete its probe into the fund collapse by the end of the year. He said at the time the FCA had gathered in excess of 20,000 “items of relevant material” from key individuals, as well as carrying out 14 witness interviews.

In his letter to Stride last month, Rathi added the regulator has instructed an expert witness to provide an opinion on the evidence it has gathered, as well as legal counsel to assist it.

Stride responded to Rathi’s letter on 10 January.

He said: “The collapse of the Woodford Fund led to significant losses for many retail investors. The FCA’s investigation is set to move into a new phase, and I have today written to the FCA to urge them to allocate the resources required to enable as swift a conclusion to their investigation as possible.”

Woodford, once the poster boy of the UK fund management industry, has been keeping a low profile since his eponymous investment empire collapsed in four months after his flagship fund was suspended.

In February last year, he announced plans to launch a Jersey-based venture called Woodford Capital Management Partners that will target institutional clients and focus on the biotech, British biosciences and healthcare sectors.

However, the comeback announcement prompted a statement from the FCA in February, saying that it had not been approached by Woodford for authorisation.

Jersey’s financial regulator also said it had not received an authorisation request from Woodford, adding that it was “disappointed” the fund manager had announced plans for his new venture without first seeking the appropriate permissions.

To contact the author of this story with feedback or news, email David Ricketts

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