JEFF PRESTRIDGE: Regulator dozes as Neil Woodford woes hit home

JEFF PRESTRIDGE: Financial Conduct Authority dozes as emotional impact of Neil Woodford scandal on fund’s investors hits home

Although much has been written about the fall from grace of investment giant Neil Woodford, the financial anguish he caused thousands of investors has done little to awaken the regulator from its slumbers. 

The Financial Conduct Authority, it seems, sleeps on like a hibernating dormouse, oblivious to the need to take swift action against those who played a big part in the demise of multi-billion pound investment fund Woodford Equity Income and asset manager Woodford Investment Management. 

So far, 16 months have passed since Equity Income was suspended, yet the regulator has held no one to account. 

Asleep on the job: 16 months have passed since Neil Woodford’s fund, Woodford Equity Income, was suspended – but the FCA has not held those involved to account

Not investment megalomaniac Woodford; not fund supervisor Link (about as useless as the FCA in protecting the interests of investors); and not those (Hargreaves Lansdown) who promoted Woodford as if he had an investment halo sitting six inches above his head. 

An unacceptable state of affairs, especially when set against the fact that since 2016, the regulator has awarded its staff bonuses of more than £125million. 

For doing what? Being part of an organisation that has done precious little to safeguard investors from financial scandals such as Woodford and failed minibond issuer London Capital & Finance? Talk about self-serving. Rewards for failure. 

No wonder the regulator’s boss Nikhil Rathi has promised to scrap them after conceding they had ‘not been effective at driving individual or collective performance’. 

Too right. No wonder the regulator’s chairman since April 2018 is stepping down a year early.

The hurt that the Woodford debacle has caused investors was highlighted a few days ago by research undertaken by the Association of Investment Companies (AIC). 

 Some 53 per cent of those canvassed say they were emotionally impacted by the disturbing turn of events at Woodford while 77 per cent say their faith in investment managers has diminished

Its finding that 86 per cent of Woodford investors have suffered financially as a result of Equity Income’s suspension is hardly revelatory. 

Far more striking are the findings on investors’ general wellbeing and trust in the investment industry. 

Some 53 per cent of those canvassed say they were emotionally impacted by the disturbing turn of events at Woodford while 77 per cent say their faith in investment managers has diminished. 

All rather disturbing. But of course, the regulator will ignore the research findings and bat away the AIC’s sensible demand for tougher rules on the type of assets that funds set up in the same way as Woodford Equity Income can invest in. 

Regulatory hibernation is the order of the day and night. 

Is contactless payment rise really a good thing? 

I’m not sure Friday’s increase in the contactless payment limit to £100 – without the need to enter a PIN – is a good thing. 

It will surely be seized upon by fraudsters who will now be able to spend cumulatively up to £300 on a stolen card before being required to enter a PIN. 

For the time being, I will be asking my bank and credit card provider to keep my contactless limit at £45 – most banks and card issuers have already indicated they will allow customers to set their own. 

Indeed, my bank is forever asking me to enter a PIN when I buy a wake-up black filter coffee for £1.25 at Pret A Manger on my way into work. 

Annoying? Occasionally, yes, but I would rather bank with an organisation that takes my financial security seriously rather than stands by and allows fraudsters access to my hard-earned money.