Woodford Investment Management  

Link may be fined £306mn by the regulator over Woodford

Link may be fined £306mn by the regulator over Woodford
 

Link Fund Solutions may be liable for a £306mn fine over its handling of the Woodford fund scandal, the Financial Conduct Authority has said.

In a statement yesterday (September 12), the regulator said although it has not completed the case against Link, its current view is that the redress may reach £306mn.

This does not include any amount owed to fund members, the FCA added.

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The statement was prompted by a Canadian company, Dye and Durham, submitting a takeover bid for Link.

The FCA has approved the takeover, 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.

The regulator said it would provide an update on redress to clients as soon as it was able to do so.

Ryan Hughes, head of investment partnerships at AJ Bell, said: “This is the first sign that the investigation into the collapse of the fund is perhaps coming closer to completion, however, the FCA has made it clear that other parties remain under investigation and that Link could appeal any penalty.

“How any payment would be made to impacted investors is as yet unclear and no doubt the FCA will want to complete its wider investigation first. There will likely be further developments particularly given the breadth of the investigation but this news may be a sign that pressure from the Treasury earlier in the year has finally sped things up.

"Investors who have waited so patiently will be hopeful that some form of financial redress may be forthcoming and they can begin to draw a line under this sorry saga.”

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."