"Being a leader in financial services comes with responsibilities as well as profile. Mr Woodford simply doesn’t accept he had any role in managing the liquidity of the fund."
- Steve Smart - The Financial Conduct Authority
The Financial Conduct Authority (FCA) has issued decision notices proposing nearly £46m in penalties against Neil Woodford and Woodford Investment Management (WIM) for their roles in the management of the now-suspended Woodford Equity Income Fund (WEIF).
Mr Woodford faces a proposed fine of £5,888,800 and a ban from holding senior management positions or managing retail investment funds. WIM is facing a £40m penalty.
Both Mr Woodford and WIM have referred the FCA’s decision notices to the Upper Tribunal, meaning the findings remain provisional while each party presents its case.
The WEIF, which was once valued at over £10.1bn in May 2017, fell to £3.6bn before its suspension in June 2019. The suspension left thousands of retail investors unable to access their money, prompting regulatory scrutiny of how the fund’s liquidity was managed in its final months.
The FCA found that between July 2018 and June 2019, WIM and Mr Woodford made what it described as "unreasonable and inappropriate investment decisions", selling more liquid assets and increasing exposure to less liquid holdings. By the time the fund was suspended, only 8% of its assets could be sold within seven days, far below the level required to meet redemption obligations under existing rules.
In its statement, the regulator noted that WIM and Mr Woodford failed to adjust their approach as the fund’s value declined, liquidity weakened, and investor outflows increased. As a result, remaining investors were disproportionately disadvantaged compared to those who exited earlier.
The FCA also concluded that Mr Woodford maintained a "defective and unreasonably narrow understanding" of his responsibilities. Despite his senior position, he reportedly denied responsibility for overseeing liquidity management during interviews with the FCA and failed to provide adequate oversight of WIM’s engagement with Link Fund Solutions, WEIF’s authorised corporate director.
Steve Smart, joint executive director of enforcement and market oversight at the FCA, said: “Being a leader in financial services comes with responsibilities as well as profile. Mr Woodford simply doesn’t accept he had any role in managing the liquidity of the fund. The very minimum investors should expect is those managing their money make sensible decisions and take their senior role seriously. Neither Neil Woodford nor Woodford Investment Management did so, putting at risk the money people had entrusted them with.”
The regulator had previously taken enforcement action against Link, including a £230m redress scheme aimed at compensating investors trapped in the WEIF at the time of its suspension.
