MPs criticise UK watchdog for slow progress of Neil Woodford probe

MPs have criticised the UK financial regulator for slow progress on its two-year investigation into the failure of Neil Woodford’s flagship fund, after the regulator said its work was likely to continue for months.

In a letter to the Treasury select committee of MPs published on Friday, Financial Conduct Authority chief executive Nikhil Rathi said the regulator had finished “all key interviews” but could not share more details of its investigation. Rathi said the FCA was due to finish its “investigation work before the end of the year”. 

Committee chair Mel Stride said: “Almost two years since the FCA launched its investigation into the collapse of the Woodford fund, we’re yet to see any results, or be told when we can expect an indication of any findings.

 “Whilst it is right that all due process must be followed, the longer the investigation goes on, the greater the sense of disappointment that will be felt by those who lost out.” He said the committee expected to be “updated regularly by the FCA”. 

The committee called on the FCA to update MPs and set an end date for its investigation earlier in the year.

The FCA opened an enforcement investigation into events surrounding the collapse of the Woodford Equity Income fund in June 2019 and is looking at both Woodford and Link Fund Solutions, which was responsible for running the fund. 

Woodford was forced to suspend trading in his £3.7bn flagship fund on June 3 2019 after a deluge of redemption requests. Investors stand to lose almost £1bn by the time the fund’s remaining assets are sold, according to lawyers — more than a quarter of the fund’s total value when it was suspended. 

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Rathi said 14 witnesses had been interviewed and 20,000 pieces of evidence analysed as part of the probe. He said: “I appreciate it may be frustrating that I am unable to provide further details regarding the investigation” but added that he was bound by confidentiality.

The regulator has never publicly revealed the scope of its probe but, according to two individuals close to the investigation, it is scrutinising to what extent the interests of all investors were adequately considered when the fund was suspended. The FCA has the power to fine or ban individuals if it finds wrongdoing.

It has also been looking at whether Woodford or Link broke the “spirit of” FCA rules.

Since the start of the year, it has interviewed Woodford as well as his ally and business partner Craig Newman and senior members of Link, but has yet to reveal the direction of its investigation or set an end date. Rathi said witnesses may need to be re-interviewed and experts might need to be called to give evidence.

The watchdog revealed in 2019 that Woodford had twice exceeded the 10 per cent regulatory cap on unlisted securities, 16 months before the fund was forced to block withdrawals.

The regulator has come under pressure to show results in its Woodford probe, particularly following criticism of its own record on the scandal. It was warned about problems at Woodford’s investment business as early as 2015 but took no action for two more years. 

Link and the fund platform Hargreaves Lansdown are also facing legal action brought by investors claiming they were not protected from the collapse of the fund. 

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