City watchdog blasted over Woodford probe

City watchdog Financial Conduct Authority blasted over its handling of the probe into the collapse of Woodford Investment Management

Probe: Neil Woodford’s investment empire collapsed in 2019

The City watchdog has been blasted over its handling of the probe into the collapse of Woodford Investment Management. 

The Financial Conduct Authority (FCA) kicked off its inquiry into what led to the demise of Neil Woodford’s investment empire in June 2019. 

But two years on, MPs slammed the FCA for its slow progress after it gave an update devoid of any detail. Sources close to the investigation told the Mail that Woodford was only interviewed this month. 

Tory MP Mel Stride, chairman of the Treasury committee, said: ‘Almost two years since the FCA launched its investigation into the collapse of the Woodford Fund, we’re yet to see any results. Whilst it is right that all due process must be followed, the longer the investigation goes on, the greater the sense of disappointment that will be felt by those who lost out.’ 

The flagship Woodford Equity Income fund was frozen in June 2019 – denying investors access to £3.7billion of their savings. The fund was eventually shut down and some money has been returned to investors – but the value of the savings has fallen by around £1billion, leaving them nursing heavy losses. 

Earlier this year Nikhil Rathi, chief executive of the FCA, agreed to give the Treasury committee an update on its inquiry by the end of May. 

In Rathi’s letter to the committee, sent yesterday, he said: ‘The investigation has made substantial progress. To date we have conducted 14 witness interviews, with all key interviews now having been completed.’ 

He said ‘over 20,000 items of relevant material’ had been gathered from ‘all the key parties’. 

Rathi said he was confident that investigation work would be completed by the end of the year, but that he was ‘unable to give a precise timeline for any public indication of the outcome’. 

Woodford’s investment empire collapsed in 2019, after his flagship Woodford Equity Income fund was shuttered in June that year. Woodford did not have enough ready cash with which to repay investors who tried to pull their money out. 

Link, the firm which oversaw Woodford’s management of the fund and which is also in the crosshairs of the FCA investigation, decided to freeze investors’ money inside. They hoped this would give Woodford time to sell off some assets and raise more cash. 

But later in 2019, Link decided that the fund would be wound up and the money returned to investors. That process is still ongoing, but investors have lost around £1billion since the suspension. 

Woodford was fired from running the flagship fund, and resigned from his Income Focus fund and Patient Capital trust. His conduct came under scrutiny after it emerged he had repeatedly breached rules on how much of the Equity Income fund’s money should have been invested in unlisted, hard-to-sell stocks. 

He had also tried to dodge the rules by listing his stakes in some unlisted companies on the Guernsey stock exchange, which raised eyebrows among City experts. 

Leigh Day, the law firm representing Woodford investors, said: ‘Given the scale of the investigation, it is clear it will be some time before the FCA provides its conclusions and, in the meantime, it is the ordinary investors who have lost hard-earned savings and pensions that continue to suffer.