Neil Woodford will make nearly £2million in management fees from savers who cannot get access to their next nest eggs during the first four weeks that his flagship fund is shut.
The once-feted fund manager was under mounting pressure last night to hand back the ‘disgraceful’ fees.
Despite banning savers from withdrawing their cash from his Equity Income fund, Mr Woodford is still taking raking in around £93,000 per working day in management fees.
Neil Woodford will make nearly £2million in management fees from savers who cannot get access to their next nest eggs during the first four weeks that his flagship fund is shut
It means his firm, Woodford Investment Management, stands to make nearly £2million during the first 28 days his fund remains ‘gated’. But there is speculation that it will stay shut until Christmas, a period over which he would earn about £14million.
Critics have urged Mr Woodford, 59, who has made more than £60million from his investment business in just four years, to hand back the cash while the freeze stays in place.
But the father-of-two has refused to back down, reportedly arguing that the charges will stay in place because he is still managing funds on his customers’ behalf.
James Daley, founder of campaign group Fairer Finance, said: ‘Neil Woodford needs to show some compassion for his clients. By all accounts, he was getting paid incredibly well and he has made a lot of money over the years.
John Mann (above), a Treasury Committee member, said: ‘It’s a total disgrace that Neil Woodford continues to charge savers hundreds of thousands of pounds in management fees when they are unable to access their money’
‘If he wants any chance of rebuilding his reputation, he needs to show some contrition and humility – and one easy way to do that would be to waive these fees while the freeze on withdrawals continues.’
MPs on Parliamentary committees have said they will examine the affair. John Mann, a Treasury Committee member, said: ‘It’s a total disgrace that Neil Woodford continues to charge savers hundreds of thousands of pounds in management fees when they are unable to access their money. He should waive them immediately.’
Mr Woodford, once considered a star fund manager, has made a fortune, buying luxurious homes in Devon and the Cotswolds
Mr Woodford, once considered a star fund manager, has made a fortune, buying luxurious homes in Devon and the Cotswolds.
He set up his own investment fund in 2014 and since then has extracted about £63million in dividends and shared profits from the businesses, although some of this was given to charity or reinvested.
The crisis at his empire erupted after hundreds of millions of pounds was pulled from its Woodford Equity Income fund in a matter of weeks, after several bad bets on shares.
He took the drastic step of banning further withdrawals last Monday, after Kent County Council tried to pull about £263million of pension money from the fund.
But Mr Woodford, who told savers he was ‘extremely sorry’ for the move, has continued to charge management fees to savers who were blocked from getting their cash for at least 28 days. A spokesman said his fees remained ‘unchanged’.
Hargreaves Lansdown, the investment platform through which £1.1billion of savers’ money was put into Mr Woodford’s main fund, has also called on him to cut fees. It has waived its own charges for customers with money in the fund while the freeze continues.
Facing difficult questions, the wealthy pal who backed him as disaster loomed
One of Neil Woodford’s biggest champions was last night facing questions about his close relationship with the embattled fund manager.
Mark Dampier, 62, made millions promoting his friend’s investments.
He and his 63-year-old wife Annette have enjoyed a lifestyle of luxury thanks to his position as top financial adviser at Hargreaves Lansdown – an investment platform through which £1.1billion of savers’ cash was put into Mr Woodford’s main fund.
Mark Dampier (pictured left) has been one of Neil Woodford’s (right) biggest champions
The two men have known each other for 25 years, with Mr Dampier helping to promote his friend’s interests with personal interviews posted online.
But on Monday Mr Woodford told customers of his flagship Equity Income fund that they cannot take their cash out for at least 28 days. As disaster loomed, Mr Dampier stood by his pal.
He waited until the fund was frozen to take it out of Hargreaves Lansdown’s ‘Wealth 50’ list of fancied funds, a crucial tool for their 1.1million customers to decide where to park their money.
Just weeks ago Mr Dampier told clients: ‘This isn’t the first time in his career Neil Woodford’s under-performed. We think he’s still got the skill to deliver excellent long term performance.’
Yesterday Hargreaves Lansdown boss Chris Hill issued a grovelling apology to clients. In a message, he said: ‘We all share their disappointment and frustration. Our priority right now is to support our clients and keep them informed.
He and his 63-year-old wife Annette have enjoyed a lifestyle of luxury thanks to his position as top financial adviser at Hargreaves Lansdown
‘The shortcomings of one fund should not detract from the benefits of favourite fund lists like the Wealth 50.’
Mr Dampier’s support for Mr Woodford includes personal interviews broadcast to tens of thousands of Hargreaves customers online. At one meeting in 2017, Mr Dampier told the cameras: ‘I think a fund that’s focused on income is exactly what’s needed right now.’
The pair met for another cosy interview in Oxford in 2018. Earlier this year he blamed Mr Woodford’s woes on Brexit, and described those who criticised his ongoing support a ‘hassle’.
It has also emerged Mr Dampier and his wife had sold £5.5million worth of Hargreaves Lansdown shares before the Woodford scandal caused them to tumble.
Last night MPs and City groups were questioning the cosy relationship between the two financial bigwigs. Former Liberal Democrat leader Sir Vince Cable said: ‘This sounds like something which, even if legal, is perilously close to insider dealing.
‘Financial advisers have struggled to rebuild their reputation after previous scandals and this episode reflects badly on the profession as a whole.’
Labour MP Wes Streeting, a member of the Treasury select committee, said: ‘There are serious questions to be answered by Hargreaves Lansdown and the regulators, the Financial Conduct Authority, about regulatory failure and the fees that changed hands’
Labour MP Wes Streeting, a member of the Treasury select committee, said: ‘There are serious questions to be answered by Hargreaves Lansdown and the regulators, the Financial Conduct Authority, about regulatory failure and the fees that changed hands.’
Tory MP Nicky Morgan, chairman of the committee, has already said she would raise the ‘troubling episode’ in an upcoming meeting.
John Hunter, director at the UK Shareholders’ Association, said: ‘Ordinary savers need to know that when a share or fund is tipped, that the advice they are following is entirely independent, or that relationship should be declared.’
Mr Dampier’s career in finance has made him and wife Annette a small fortune. The pair enjoy telling friends on social media about sailing on their boat, skiing in luxury Alpine resorts and relaxing in their multi-million pound homes.
The pair own Oakridge Hall, an enormous country pile in the village of Winscombe, north Somerset, as well as a four-bedroom holiday home overlooking the River Dart in Dittisham, Devon.
He bought the house and adjacent land for £3.1million in 2010 and counts BBC broadcaster David Dimbleby as a neighbour.
The pair own Oakridge Hall, an enormous country pile in the village of Winscombe, north Somerset, as well as a four-bedroom holiday home overlooking the River Dart in Dittisham, Devon
Mrs Dampier has built a £39,000 ‘garden art studio’ in the professionally landscaped garden.
The couple have bragged online about taking delivery of a 25-foot yacht called Annaline, worth £50,000. They post pictures from their annual skiing holidays to the Alps, including regular breaks in a £14,000-per-week luxury chalet in Obergurgl, Austria.
Mr Dampier also enjoys fishing holidays in exclusive spots such as East Ranga, Iceland – where trips are advertised at £4,000 per week.
The couple’s only son Luke, who went to a state school in Somerset, also appears to have a taste for the high-life. He posts photos of himself sailing in his £25,000 racing boat and flying helicopters.
It is thought Mr Dampier is set to retire after this year – which is partly the reason he sold shares in Hargreaves last month, a source told the Financial Times.
Drop fees NOW – or lose trust for ever says Victoria Bischoff
It is nothing less than obscene that Neil Woodford is still cashing in after gambling so arrogantly with savers’ hard-earned money.
While he continues to pocket around £93,000 every working day in fees, investors face being unable to access their money for weeks – or perhaps even months.
What is so ill-judged is that he thinks he can get away with this just because the terms and conditions of his fund permit it.
It was not until late the following night that investors received an apology – which came in the form of a bizarre YouTube video
But then Mr Woodford’s response to this whole crisis has been utterly mystifying. First there was a strange statement from the ‘corporate directors’ of his fund, which did not even feature a quote from the man responsible for the mess.
It was not until late the following night that investors received an apology – which came in the form of a bizarre YouTube video.
Now, we are a week on and Mr Woodford seems to think that it is perfectly reasonable to expect savers to continue paying his fees.
Scrapping them is the absolute least he should be doing for loyal investors who trusted him with their life savings.
There had been warning signs that all was not well at Woodford’s fund for some time. Yet he stuck to his guns, insisting he knew better long after the music had stopped.
Now Mr Woodford has the gall to expect investors to continue paying for his supposed expertise as he attempts to navigate a way out of this mess.
Yes, he is still managing investors’ money – indeed, I’m sure he has never worked so hard in his life as he attempts to stabilise the fund, trading £95million worth of stock in just a few days. But he is the one who made the catalogue of investment errors that put savers in this position in the first place.
In an industry where trust is everything, it seems unlikely that Mr Woodford or his flagship fund have much of a future.
But if the once idolised manager is to have any hope of redemption at all he must waive his fees.
Even Mr Woodford’s biggest cheerleaders at Hargreaves Lansdown have scrapped their charges. If they can show some humility, surely he can too.
Because one thing is for sure – if he doesn’t act soon then it won’t matter what he says or does because no saver will ever trust him again.