Woodford administrators’ £300m fine ‘not enough’

LAWYERS representing investors in Neil Woodford’s collapsed equity income fund have lashed out at the City watchdog over a £300m fine set to be levelled against the fund’s adviser.

Leigh Day, a City law firm representing thousands of Woodford investors, said the proposed £306m penalty against Link Fund Solutions was “nowhere near enough” to compensate its clients, adding that compensation should “be in the billions”.

It also hit out at the Financial Conduct Authority (FCA) for the timing of the announcement, saying: “It is astonishing that it has taken a takeover bid of Link Group for the FCA to give this indication that it considers Link did breach its duties regarding Woodford.”

The FCA said on Monday that it was “likely” to hit Link with a “financial penalty and/or consumer redress” of up to £306m due to “misconduct”.

Link was the so-called authorised corporate director of the Woodford Equity Income Fund, which meant it had a duty to monitor the fund and hold the fund manager to account.

Mr Woodford’s fund was suspended in June 2019 after the former star stock picker was unable to sell assets quickly enough to meet mounting withdrawal requests. The £3.7bn fund was shut in October 2019, leaving more than 300,000 savers nursing heavy losses.

‘It is astonishing that it has taken a takeover bid of Link Group for the FCA to give this indication’

The FCA has yet to conclude its investigation into Link, but made an announcement on Monday in light of the fact that the company is in the process of being bought by Dye & Durham.

The FCA said it will not approve the deal unless the Canadian company agrees to cover the liabilities related to Link’s role in the Woodford blow-up.

Yesterday, Link said it would “explore all options” if the FCA does fine the company, including challenging the regulatory decision. It added: “Link does not agree with the FCA’S view.”

The FCA declined to comment.