The administrator of Neil Woodford’s collapsed investment fund could be forced to dish out compensation payments of up to £306m, the Financial Conduct Authority said today.
Link Group (LFS), which managed the £3bn Woodford Equity Income Trust when it collapsed and left investors millions of pounds out of pocket in 2019, has been under investigation by the FCA since June of that year for its role in the scandal.
The watchdog said today that its investigations so far have indicated that Link will be forced to pay a hefty financial penalty as well as consumer redress, although it had not yet settled on a final decision.
“The FCA’s current view is that the redress payment LFS could be required to pay may be up to £306m,” it said in a statement.
“This redress proposal reflects the FCA’s current view of LFS’s failings in managing the liquidity of the WEIF.”
An investigation into into the operation of the fund is still ongoing however, it added.
The FCA was prompted into an announcement by the proposed takeover of Link by Canadian software group Dye & Durham, which is required to get the regulator’s approval for the deal.
A takeover could now be scuppered however unless Dye & Durham agrees to foot the bill for Link if it does not have the required assets.
Dye & Durham said in a statement to the Toronto Stock Exchange that Link had disclosed no provision set aside to cover the liabilities of the deal, meaning that it could fall to Dye & Durham to cover the £306m in order to proceed with the takeover.
The Canadian Software giant said it is now “assessing the impact of the proposed condition on the proposed acquisition of Link Group” and is in active discussions with Link Group to find a way forward.
Link was contacted for comment.