The Financial Conduct Authority has been accused of lethargy and being “on the back foot” in its investigation into the collapse of Neil Woodford’s fund empire and response to news that the disgraced fund manager is looking to manage money again.
The City watchdog broke its silence on the former star manager’s dramatic comeback late on Tuesday evening, days after he revealed to the Telegraph plans to launch a Jersey-based fund under a new business, Woodford Capital Management Partners (WCMP).
Mark Steward, director of enforcement and market oversight at the FCA, said the regulator would cooperate with the Jersey Financial Services Commission to share information on any applications made in their respective jurisdictions.
He also said that WCMP would need to apply for permission before commencing any activity in the UK. The FCA said it would consider whether Woodford’s new business is “ready, willing and organised to comply, on a continuing basis, with our requirements and standards”.
Steward added that this includes “the sustainability of the firm’s business model and the fitness of its management”.
FCA is ‘always on the back foot’
But CWC Research managing director Clive Waller said of the FCA response: “They are always on the back foot. They knew Woodford was threatening to make a comeback. They should have had a prepared and tough response.
“It could have been along the lines of: ‘Mr Woodford will have to prove that he is a fit and proper person to receive approval from us’. Given the recent history, that is most unlikely in the short term, at least,” said Waller.
Steward confirmed the UK watchdog is still investigating the suspension of the Woodford Equity Income fund but that the pandemic has hindered access to certain documents and witnesses. He acknowledged lengthy investigations cause “frustration among those affected by a firm or fund failure and who are, understandably, looking for answers”.
Investigation started ‘well before’ pandemic
However, Gina Miller, co-founder of the True & Fair Campaign, noted that the FCA’s investigation has been ongoing for 20 months, well before the pandemic took hold.
“The FCA’s lethargy and complacency is the last thing that hard pressed victims deserve,” Miller said. “We continue, therefore to call for an independent investigation into the fund’s collapse and, also, into the FCA’s own role in allowing this to happen.”
She added: “The fact that the FCA’s response solely refers to investigating the persons/firms responsible for misconduct, implies it is turning a blind eye to any review of its own potential regulatory failings pertaining to this scandal.”
See also: FCA launches investigation into frozen Woodford fund
On Tuesday, Miller doubled down on calls for the Treasury Select Committee to investigate the collapse of Woodford’s fund empire, while the FCA’s probe “meanders on”.
Woodford’s business collapsed in 2019 after the fund manager delivered a period of underperformance, investing in risky, unlisted start-ups, leading to mass redemptions. However, he has vowed that WCMP will not be running daily liquidity fund and thus “won’t be exposed to the same sorts of problems”.
