Disgraced fund manager Neil Woodford and his company, Woodford Investment Management (WIM), are facing nearly £46 million in penalties from the UK’s Financial Conduct Authority (FCA) following the 2019 collapse of the Woodford Equity Income Fund (WEIF).
The FCA plans to fine Woodford almost £6 million and ban him from senior management and overseeing funds for retail investors. WIM faces a £40 million fine. The firm says it “strongly” disagrees and will appeal, meaning the sanctions are not final.
Once hailed as Britain’s answer to Warren Buffett, Woodford built his reputation at Invesco Perpetual before launching WIM in 2013. His flagship WEIF attracted £10 billion at its peak.
But the fund collapsed in June 2019 after its value fell to £3.6 billion and investors rushed to withdraw cash. More than 300,000 people were unable to access their savings.
The FCA said that between July 2018 and June 2019, Woodford and WIM made “unreasonable and inappropriate investment decisions,” selling liquid assets and buying illiquid ones. By the suspension, only 8% of holdings could be sold within a week — well below requirements to meet withdrawals within four days.
According to the regulator, Woodford and WIM failed to act as conditions worsened, disadvantaging investors who remained compared with those who exited earlier.
Steve Smart, FCA joint executive director of enforcement, said: “At the very least, investors should expect sensible decisions from those managing their money. Neither Neil Woodford nor his firm met that standard.”
WIM argues the fund followed a liquidity framework set by Link Fund Solutions (LFS), which oversaw liquidity and whose approach was visible to the FCA. The company insists the “true cause” of losses was Link’s decision to wind up the fund in October 2019, four months after suspension, while Woodford was restructuring.
In 2023, LFS was acquired by Waystone Group. The FCA later ruled that LFS had also failed to act with “due skill, care and diligence” in managing WEIF.
Both Woodford and WIM said they sympathised with investors who lost money but maintain those losses could have been avoided had the fund been reopened rather than liquidated.
It is not clear where the money to pay the corporate fine would come from as WIM’s assets of £30,000 dwarf the firm’s liabilities of £260,000, according to the company’s accounts for the year to March 2024.
Caroline Black, a consultant at Gherson Solicitors, said: “The ban of Neil Woodford and fines levied against him and the Woodford Equity Income Fund are a stark wake up call for those in senior positions.
“The decision notice makes plain that although Mr. Woodford was the designated risk owner for liquidity risks, he had sought to rely on the compliance and risk functions to set liquidity thresholds and raise any concerns. The FCA has roundly rejected this approach and apportioned personal responsibility at the highest level.”
