Investment juggernaut Fundsmith has been asked to undertake a skilled person review by the Financial Conduct Authority.
The review is a regulatory tool, under section 166 of the Financial Services and Markets Act (FSMA), which allows the FCA to trigger an independent view of a firm’s activities that are a cause for concern or require further analysis. This includes governance, controls or risk management assessments.
The news, which was first reported by The Mail on Sunday, means that Terry Smith’s (pictured) eponymous firm will be scrutinised by a third party; commonly one of the ‘Big Four’ accountants or a law firm.
No details have been provided about what triggered the S166 or when it might be completed. An FCA spokesperson told Portfolio Adviser that it is unable to confirm or deny if an S166 has been served. However, the latest figures from the watchdog show that a total of 11 were issued in the first quarter of 2022.
A spokesperson for FundSmith declined to comment.
In January, Portfolio Adviser reported that Fundsmith profits jumped 19% in 2021 despite a rare period of underperformance. Smith personally netted a £35.7m payout, up from £29.7m the previous year.
Smith’s £25bn flagship Fundsmith Equity strategy also defied the rotation away from growth investing and tech-sell off in the early part of 2022 to remain the most bought fund on Interactive Investor in March.
Though it has lost investors 11.1% year-to-date, versus the IA Global’s -8.3% return, it has returned close to 500% since launching in 2010, over two and a half times higher than the average.
See also: Simon Barnard: Smithson should have theoretically underperformed in 2021
