The FCA has rejected calls for in independent investigation into its own role in the Woodford scandal despite mounting pressure from high-profile campaigners and MPs.
In response to a letter from the True and Fair Campaign, FCA chairman Charles Randell said that the City watchdog alone has the power to investigate regulatory contraventions and take enforcement action and that, under the Financial Services and Markets Act (FSMA) 2000, it could not delegate these power to third parties.
The watchdog’s investigation of the collapse of Neil Woodford’s Equity Income fund in 2019, which saw over 300,000 investors lose nearly £1bn collectively, has dragged on for 21 months.
True and Fair campaign founders Gina and Alan Miller (pictured) argued in a letter to the non-executive directors at the FCA on 11 March there is “an urgent and unanswerable case” that the Woodford investigation should be conducted independently and must include the conduct of the FCA relating to the scandal.
They accused the FCA of breaking its “consumer protection objective” which requires “securing an appropriate degree of protection for consumers under the FSMA 2000, and highlighted a number of failures on the part of the regulator, including the failure to act on numerous warning about the liquidity of the fund dating as far back as January 2015, months after the fund launched.
Randell said that the board will consider the issues raised carefully as it continues to engage with the matter.
‘We had suspected the FCA would sidestep its own conduct’
The Millers said the FCA’s decision to “completely snub” calls for an independent investigation reveals a “contemptible, arrogant attitude” that undermines the damage the Woodford scandal has had on trust in the investment industry and the regulator.
“We had suspected that the FCA would sidestep its own conduct but even so we were shocked to see it in black and white,” they said.
“The FCA cannot ever learn from its mistakes and thereby reduce the likelihood of future mistakes if the board abdicates the FCA’s statutory objectives ‘to protecting consumers, keeping the industry stable, and promoting healthy competition between financial service providers.
“They need to show courage and integrity or a charge of coverup or whitewash would not be misplaced.”
In their letter to the board the campaigners said that under S.68 of the FSMA 2000, there are provisions for the Treasury to arrange independent inquiries where events have occurred in relation to a collective investment scheme which “posed or could have posed a serious threat to the stability of the UK financial system or caused or risked causing significant damage to the interests of consumers”. Considering the scale and impact of the Woodford saga, the True and Fair Campaign believe that these conditions are met.
The Millers have doubled down on calls for the Treasury Select Committee to investigate the collapse of Woodford Equity Income after Woodford revealed his shocking return to the investment industry with the launch of a Jersey-based fund.
Last month, Treasury Select Committee chair Mel Stride called for the FCA to set out an end date for its investigation amid outcries from investors following Woodford’s comeback.
