InvestmentsJun 14 2019

Woodford cont. and Sipp claims: the week in news

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Woodford cont. and Sipp claims: the week in news
ByImogen Tew

It’s been an eventful week for political news with the fiery Tory leadership contest dominating every front page as favourite Boris Johnson scooped a landslide win in the first round, whittling the list of candidates for PM down to six.

However, amid the politics, financial regulators have had a busy week and Woodford’s name has still frequently made headlines. It’s time for the week in news.

1 A (second) week of Woodford woes

The previously revered fund manager, Neil Woodford, this week wrote a letter to advisers urging them to stick with his currently suspended Equity Income fund once it reopens.

In the letter, Mr Woodford apologised for the fund being suspended and acknowledged it had happened because of his investment philosophy.

He closed the fund earlier this month (June 3) following a rush of redemptions from clients eager to take their cash out of the badly performing fund.

Mr Woodford has since been selling shares to raise enough cash to reopen the fund — and FTAdviser revealed which firms he had cut his stake in.

Meanwhile chief executive of the Financial Conduct Authority, Andrew Bailey, and chairwoman of the Treasury Committee, Nicky Morgan MP, have both urged Mr Woodford to suspend his fee during the upheaval, but he hit back saying the fund remained actively managed.

2 A Sipp slip

The Financial Services Compensation Scheme could receive millions of pounds worth of claims as GPC Sipp Limited, formerly known as Guardian Pension Consultants, entered administration this week.

The firm became insolvent because several alternative investments present in its Sipps failed.

These included Harlequin Properties — a luxury hotel development that was largely never built.

A total of 141 Sipp clients have already launched legal action against GPC, and all of these have already been compensated for their losses by the FSCS.

This week the FSCS issued a statement inviting more claimants to come forward.

3 Out of time

The Financial Ombudsman Service rejected a time bar defence in the case of a 24-year-old man — with no dependents and little outgoings — who was sold two whole-of-life insurance policies in 1990.

Sanlam Life & Pensions UK Limited said the complaint had been outside the permitted time limits and argued it had written to the client to offer a review of the advice but had received no response. 

The advice firm initially said this should have made the client aware that he had "cause to complain" but he failed to raise his concerns within three years, but the ombudsman rejected Sanlam's defence.

The ombudsman also said the advice was unsuitable as the client did not have any "specific need for life cover".

4 Eyes on misconduct