Financial Conduct Authority  

Henderson fined £1.9m after overcharging investors

Henderson fined £1.9m after overcharging investors

The financial regulator has fined Henderson Investment Funds almost £2m after it found the fund house had overcharged retail investors in two funds over a period of five years. 

In a statement published today (November 20) the Financial Conduct Authority stated it had fined the fund house, which became Janus Henderson Group in 2017, £1,867,900 for treating retail investors "substantially differently" to its institutional investors. 

In November 2011 Henderson's appointed investment manager, Henderson Global Investors, reduced the level of active management on two of its funds, the Henderson Japan Enhanced Equity fund and the Henderson North American Enhanced Equity fund. 

The watchdog found whilst the investment manager had informed most of its institutional investors of the change and offered to manage the two funds without charge, it had failed to communicate the change to its retail customers.

According to the FCA Henderson Global Investors continued to charge its retail investors the same level of fees for the next five years, without providing the same level of active management on the Japan and North American funds. 

In total Henderson Investment Funds charged investors £1,784,465.32 more than if they had invested in a passive fund.

This affected 4,713 direct retail customers, 75 intermediary companies with underlying non-retail investors and two institutional investors. 

Mark Steward, executive director of enforcement and market oversight at the FCA, said: "The FCA requires firms to treat all its customers fairly, not just some customers. 

"In this case, retail investors paid fees for active investment management they did not receive. For retail clients, the Japan and North American Funds were in effect operating as 'closet trackers' as the fees charged to them were inappropriate given the diminished level of active management.

"The matter is aggravated by the length of time HIFL took to identify the harm being caused to the retail investors and to fix it."

The FCA said the fund house had now compensated all affected investors, but the regulator warned the situation had revealed "serious weaknesses" in its systems and controls. 

The regulator said these weaknesses had resulted in the issue not being identified and resolved for a "considerable amount of time".  

Henderson Investment Funds Limited agreed to resolve the issue with the regulator and therefore qualified for a 30 per cent discount on its penalty, avoiding the full fine of £2,668,547.40. 

rachel.mortimer@ft.com 

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