Embattled fund manager Neil Woodford has hit back at calls from regulators and politicians for him to forgo the management fee on his suspended Equity Income fund.
This morning Andrew Bailey, the chief executive of the Financial Conduct Authority (FCA), told the BBC's Today programme Mr Woodford might "consider" waiving the fee as a "gesture" while the fund is suspended.
This followed pressure from Nicky Morgan, chairwoman of the Treasury committee, who had urged Mr Woodford to waive the fee, and taken up the issue with the regulator in a letter this week.
Last week Hargreaves Lansdown, which itself waived its platform fee after dropping Woodford from its best buy list, had asked Mr Woodford to follow suit while the fund is suspended.
Woodford Equity Income was suspended on June 3 amid liquidity concerns after the Kent County Council pension fund informed Woodford Investment Management that it was withdrawing £255m.
Since then Mr Woodford has been working hard to sell shares to find the money for any redemptions for when the fund reopens.
Responding to the calls to drop fees, Mr Woodford’s representative said: "The company will continue to charge the fee as the fund remains actively managed and we focus on repositioning the portfolio."
The fee, which ranges between 0.5 per cent and 0.75 per cent depending on which platform a client holds the fund on, is used to run the company as a whole.
Ms Morgan had also pressured the FCA for answers to the issues raised by the fund's suspension, notably the rules around the holding of illiquid assets in open ended funds.
Such funds, which account for the vast majority of assets held on UK platforms, offer daily dealing, meaning investors can take their cash out on a daily basis, even though the underlying assets in which they are invested may not trade daily.
Mr Woodford had extensive unquoted holdings in the fund, though he has committed to having no such holdings in the fund by the end of the year.
Regulations require that open ended funds in the UK do not hold more than 10 per cent of the assets in unquoted companies. As outflows ravaged Mr Woodford’s Equity Income fund, he was in danger of breaching the 10 per cent rule.
Mr Woodford had listed some of the unquoted stakes he held on the Guernsey stock exchange, which meant they complied with the regulations, though trading on that exchange is much sparser than on the London Stock Exchange.
David Cummings, head of equities at Aviva Investors said his firm withdrew its investment from Mr Woodford’s funds last year due to concerns about the level of unquoted holdings.
He said the practice of holding such a volume of illiquid assets in an open ended fund had "predictable" consequences for Mr Woodford when the fund closed.