neil woodford

11 Jun 2019

Neil Woodford faces pressure by the regulators

The head of the Financial Conduct Authority (FCA) has called for Woodford Equity Fund to be suspended and waive the management fees they charge investors.

This comes after MP Nicky Morgan remarked that Mr Woodford had reportedly been taking £100,000 per day.

MPs have also asked for details of the FCA’s contact with Neil Woodford to be published, after raising concerns that the watchdog may not have been as proactive while the company slipped into crisis.

Questions have been raised as to whether a formal investigation will be launched into Woodford Equity Income Fund, following events that led to blocking investors from cashing out their investments.

In a letter to Andrew Bailey, chief executive of the FCA, MP Nicky Morgan stated, that the suspension of the fund “has raised significant concerns about its impact on investors and the wider regulation and supervision of funds.”

He added:

“Questions have been raised about the FCA’s alertness to the problem.”

One of UK’s best-known stock-picker, Neil Woodford, suspended his flagship earlier on last week, after an increasing number of investors wanted to withdraw their money, as the result of some poor market bets.

Mr Woodford remarked that he had taken this step in the best interest of his investors and to protect their investment.

Andrew Bailey said there was no time limit to the suspension and investors would get their money back “when the fund is put back into a condition when it can operate in an orderly fashion without disorderly sales.”

Adding:

“The worst thing, in my view, for investors would be if there had to be a disorderly fire sale of assets, which of course would destroy value for them, so in our view, suspension is what we regard as a sensible safety valve.”

The FCA itself is under fire for not spotting warning signs earlier on.

By Lyba Nasir