Jeff Prestridge  

What has the FCA been doing about Woodford?

Jeff Prestridge

Jeff Prestridge

How time flies when you are (not) enjoying yourself.

Can it really be a year since the investment empire of Neil Woodford began to crumble around his knees like a sandcastle?

The answer is a resounding ‘yes’ – June 3 2019 was the day when we learnt that Woodford Equity Income, Neil Woodford’s £3.7bn flagship fund, had been suspended because it was unable to fulfil a multi-million-pound redemption request from investor Kent County Council.

I was sipping a cortado in a café situated in the magnificent square of Soller in Majorca when I first heard news of Woodford Equity Income’s suspension.

I immediately ordered a beer as I absorbed the news – and then another one as I thought through the implications.

Although I knew the fund had been going through difficult times – I had interviewed Mr Woodford about the fund’s problems on a couple of occasions – I never thought it would end up suspended.

Before the week was out, I was back in London sitting in front of the editor of The Mail on Sunday and boldly predicting that Mr Woodford was finished as an investment manager. I wrote as much in the newspaper (June 9), much to the annoyance of some financial advisers, but my sixth sense was right.

Today, Woodford Investment Management is no more and Woodford Equity Income is no more (dissected and assets either sold off or in the process of being sold off).

As for Woodford Income Focus and investment trust Patient Capital, they are now being managed respectively by Aberdeen Standard and Schroders.

As for Mr Woodford, there were rumours of him reinventing himself in China, but I imagine the coronavirus crisis has kicked that project into the long grass. He’s probably happy as a sandboy in his Cotswolds lair with his wife and horses. Certainly, money will not be an issue.

So, a year on, is it time to draw a line in the sand and move on from the Woodford debacle? Of course, combating Covid-19, emerging from economic lockdown, and bracing ourselves for imminent economic meltdown, are far more pressing issues.

Yet we should not just allow the Woodford affair to be conveniently swept under the carpet.

Someone, somewhere needs to be held accountable for the way in which Mr Woodford was allowed – very much unchecked – to take the risks he did with investors’ money under the pretence of running an equity income fund.

If investors had known what was really going on under the bonnet of Woodford Equity Income, most would not have touched the fund with the proverbial bargepole.

Of course, it will reassure some former Woodford investors to know that a number of legal companies are now looking to launch class actions against Woodford Investment Management and others involved in ‘project’ Woodford – the likes of Hargreaves Lansdown that still had Woodford Equity Income as a best fund buy right up until its suspension and Link, the fund’s overseer.