Link 'does not agree' with FCA's view over Woodford handling
The authorised corporate director of Woodford’s equity income fund has said the company does not agree with the regulator’s view that Link Fund Solutions could be fined up to £306mn over its handling of the fund.
In a statement today (September 13), the company’s parent group, Link Administration Holdings, said Link Fund Solutions is exploring all options in relation to an investigation into its handling of the Woodford fund, including a potential challenge to any warning notice issued by the City watchdog.
“Link Fund Solutions will explore all options, including challenging any warning notice that may be issued…as Link Fund Solutions does not agree with the FCA's view,” the statement said.
Yesterday, the FCA said the company may be liable for a £306mn fine over its handling of the Woodford fund scandal, as it approved a takeover of Link Group.
Although the watchdog has not yet completed the investigation, it said its approval of Canadian group Dye and Durham’s takeover of Link Group was subject to a condition that D&D commit to make funds available to make up any shortfall in Link’s ability to pay any redress imposed.
In the statement today, Link Group said it remains supportive of Link Fund Solutions, and highlighted that the latter is trading profitably with a “leading position” in its market.
“Link Group considers that any liabilities relating to the Woodford matters will be confined to Link Fund Solutions.”
The potential fine imposed by the FCA is not a final decision, it said, and that it would provide an update to interested parties as soon as possible.
Fund collapse
As the authorised corporate director of Woodford Investment Management, Link has been under investigation by the FCA since the collapse of the Woodford Equity Income Fund.
The fund, once worth £10bn, began struggling with a wave of redemption requests in 2019.
After a scramble to sell shares to improve the fund’s liquidity, Link announced in October of that year that the fund would be wound down and Neil Woodford fired.
Thousands of investors saw their money trapped in the suspended fund and lose considerable sums as a result.
At the point of its suspension, the fund was £3.5bn in size - though it had shrunk to £2.9bn by the time capital started being repaid.
So far £2.5bn has been paid out as the fund gradually sells its holdings, with investors still waiting for £140mn to be returned.
Regulator pressure
The regulator has come under pressure, most recently from MPs, over the speed of the investigation.
In May last year, chief executive of the FCA, Nikhil Rathi, told the Treasury Committee the investigation would be completed by the end of 2021 but was unlikely to be published that year.
In the statement today, the regulator said: "The FCA understands that investors will be keen to understand the impact that this may have on them, including any potential to receive redress, and will provide an update as soon as it is able to do so."
In June this year, two law firms united to take Link to court over its handling of the fund’s demise.
Leigh Day and Harcus Parker submitted a group litigation order at the High Court on behalf of more than 3,000 investors in the fund.
The claim alleges that Link breached the FCA’s rules in its performance as the authorised corporate director of the Woodford Equity Income Fund, saying it failed to ensure that the fund was managed in accordance with the Collective Investment Schemes sourcebook of the FCA handbook.
The firms believe the claim will be worth more than £100mn.
Link denies the claims.
sally.hickey@ft.com
