Wednesday 17 February 2021 7:17 am

FCA issues stern warning to Neil Woodford over shock comeback

The UK’s financial watchdog has issued a stark warning to Neil Woodford after the disgraced financier shocked the City over the weekend by announcing he will launch a comeback firm.

In a press release, the Financial Conduct Authority (FCA) said it had “noted the recent comments by Neil Woodford on his future business plans”, announcing that it will perform character assessments in its decision over whether to grant a licence to Woodford’s new outfit.

Woodford on Sunday issued an emotional apology for the collapse of his investment company, announcing comeback plans to launch Woodford Capital Management Partners — a Jersey-based fund focused on biotech assets. 

In an interview with the Sunday Telegraph, the financier apologised for the magnificent collapse of Woodford Equity Income fund in 2019, saying he was “very sorry” for what he did wrong.

“What I was responsible for was two years of underperformance — I was the fund manager, the investment strategy was mine, I owned it and it delivered a period of underperformance,” Woodford said.

The firm was was suspended in June 2019 after it was overwhelmed with withdrawal requests. Woodford, considered a star stockpicker at the time, was forced to shut the vehicle a few months later, capping off the investment industry’s biggest crisis in years.

Campaigners have said its collapse left 300,000 people “scrabbling to make ends meet”.

Activists Alan and Gina Miller, co-founders of the True and Fair Campaign, announced this morning that they have written to the Treasury Select Committee urging an independent investigation into Woodford’s comeback in the wake of his business’ spectacular collapse.

“We believe it ought to be a very serious source of public policy concern that high profile individuals such as Mr Woodford can be allowed to recommence trading, with the slate ostensibly wiped clean, when over 300,000 people some of whom may be your own constituents, are scrabbling to make ends meet after seeing their life savings decimated and their prudent actions and hopes for a secure and comfortable future suddenly and unexpectedly dashed,” the Millers said in a letter.

“The British public deserve much better,” they said, adding that they had called for Parliament to examine the role of the FCA in supervising Woodford.

Woodford said he warned administrator Link Fund Solutions against closing the fund in 2019, adding that had investors stuck with him they would be “enjoying the fruits of that faith”.

He defended the work culture of his previous investment vehicle, and denied that machismo and “yes men” contributed to its eventual failure. 

However, Woodford pledged not to repeat the mistake of investing ordinary investors’ money in illiquid stocks in his new firm, adding that doing so contributed to the collapse of his former business.

But the UK’s financial watchdog made pains this evening to assure Woodford his new firm “will need to apply for appropriate permissions before commencing any regulated activity in the UK”.

“In taking any decision on whether to authorise a firm, we consider whether it is ready, willing and organised to comply, on a continuing basis, with our requirements and standards,” FCA enforcement director Mark Steward said in a statement.

“There are reports that Woodford’s future business proposal may operate out of Jersey. We are in contact with the Jersey Financial Services Commission (JFSC) and agreed with them that we will both share information on any application made in our respective jurisdictions,” Steward added.

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