Investments  

Terry Smith: Woodford must admit failings before comeback

Terry Smith: Woodford must admit failings before comeback
Terry Smith, founder of Fundsmith

Terry Smith, the founder of Fundsmith, has said Neil Woodford’s comeback will only work if he steps forward to apologise and accept ownership over what went wrong in the past.

In an interview with Interactive Investor, Smith said Woodford would need to show he had changed in order to make his comeback a success.

Smith said in any comeback, key elements need to be shown to be there right from the start.

Article continues after advert

This includes “a strong and sometimes painful self examination” of that individual's contribution to what went wrong, followed by an apology.

It comes after Woodford revealed plans to attempt a comeback as chief investment officer at his new firm Woodford Capital Management Partners in an interview with the Sunday Telegraph on the weekend.

In it he apologised for the outcome he produced for investors, but largely blamed the actions of his funds’ administrator Link for suspending his Equity Income fund in June 2019, and for subsequently announcing the liquidation of the strategy. 

Smith said in order to retain redemption, one of the first things that needs to happen is for the individual to “very publicly” tell people how they went wrong and how things would change going forward.

Smith said: “If you actually think about what you got wrong, redemption and comebacks can sometimes work for people. 

“They [say]: ‘I have figured it out, I did this wrong, I am very sorry I did that and caused a problem, and now I am going to do this.

“Not [by saying]: ‘It wasn’t me, it was somebody else’s fault and I am going to do the same thing again’.”

WCM Partners plans to operate out of Buckinghamshire and Jersey but for now will not involve the creation of a new fund or manage money on behalf of UK advised clients. 

The firm has not yet applied for authorisation in Jersey, however.

And the Financial Conduct Authority has also stepped forward and stated he would need to apply for appropriate permissions before commencing any regulated activity in the UK.

 

Meanwhile, the resurface rattled the industry and has prompted calls for an independent investigation into the collapse of the fund, amid claims investors are "losing faith" in the regulator's supervision of the industry. 

The City watchdog's own investigation into the Woodford debacle is still ongoing. 

amy.austin@ft.com

What do you think about the issues raised by this story? Email us on FTAletters@ft.com to let us know