The Financial Conduct Authority has launched a probe of authorised corporate directors in light of the Woodford Equity Income fund suspension that will focus on the commercial conflicts faced by external providers of the oversight service.
Smith & Williamson is the first ACD the regulator has approached, bar Link Fund Solutions, which is already under investigation for its role overseeing Neil Woodford’s open-ended funds, the Financial Times reports. It revealed the visit from the regulator in a December meeting hosted by the Investment Association.
The industry probe will focus on external ACDs, like Link Fund Solutions, rather than the internal function used by most large asset managers.
In particular, the FCA will focus on the conflict between the oversight role of an external ACD and the commercial relationship it has with investment managers. Technically, an ACD, which is an authorised fund manager specifically focused on Oeics, is responsible for delegating investment management.
The Financial Times reported the Woodford crisis had prompted fund managers to consider moving the function in house.
True Potential is applying to run £9bn worth of funds in-house and end its relationship with Smith & Williamson, the newspaper said. The UK asset manager said the move was not connected to Woodford or complaints about Smith & Williamson but was rather a move to improve efficiencies.
Link, along with depository Northern Trust, would have had a front row seat to liquidity and flows problems that ultimately led to the Woodford Equity Income fund’s suspension.
