United Kingdom

Trapped Woodford investors snubbed by Financial Conduct Authority

Furious Neil Woodford investors have slammed the financial watchdog over its drawn-out probe into the savings scandal.

Grilling top regulators at the Financial Conduct Authority (FCA) yesterday, savers asked why the watchdog's investigation into the fund manager's failed empire was taking so long.

But in a snub to investors who were frozen out of the Woodford Equity Income Fund more than a year ago, and who have since lost more than £1billion of their money, the FCA's director of enforcement Mark Steward said: 'I don't think it has taken too long at this stage.'

Abandoned: Some Neil Woodford investors have watched helplessly as their savings have shrunk by more than £1bn over the last 15 months alone

Speaking at the FCA's annual public meeting, he added: 'It's a difficult and challenging investigation.'

He added: 'It's all right for them to say it hasn't been too long, but we need that money. Some small investors are unable to access the entirety of their savings.

'I would hope the investigation would lead to some form of compensation, but whether that will happen I don't know. I'm not going to hold my breath.'

Pippa Lines, who had more than £12,000 invested in the fund and is still waiting for the remnants of her money, said: 'Woodford broke the rules – he had too much money in unlisted companies. What's difficult and challenging about that?'

She added: 'There are no consequences for incompetence at the moment.

'I would like to know that someone is being held accountable for affecting people's lives.'

Investors who had their nest eggs tied up in the Equity Income Fund were barred from withdrawing their cash last June, after a run of poor performance. 

Link Fund Solutions, which was supposed to be overseeing the management of the fund, made the decision in October to shutter it entirely, selling off the assets and returning the money to investors.

But the assets have been sold for less than they were originally valued at, and Woodford investors have watched helplessly as their savings have shrunk by more than £1bn over the last 15 months alone.

The FCA launched a formal investigation into the Woodford scandal shortly after the fund was suspended last June.

And while investors are still waiting to get the remnants of their money out of the fund, no one has yet been punished. Justin Modray, of Candid Financial Advice, said: 'I imagine Woodford investors will be furious to hear of the FCA's seemingly relaxed attitude towards resolving the many important issues thrown up by the failure of the Woodford Equity Income Fund.

'It's now well over a year since the troubles began and we have yet to see the FCA take any decisive action.

'Heads need to roll, but so far the parties involved in the Woodford debacle appear to have made handsome profits while investors lose out.'

The FCA's probe is thought to be focusing on Woodford himself, who breached City rules to invest too much of savers' money in risky and hard-to-sell stocks.

And Link, whose job it was to keep an eye on Woodford for investors, has also admitted it is being investigated over its role.

In a press conference following the FCA's annual public meeting, Steward said the Woodford investigation was a 'very high priority' for the regulator.

But he added that the investigation was 'not a linear process', and that it was impossible to put a date on when it might end since the FCA was still finding out more information.

Steward said: 'We are very conscious of the issues at stake, and we need to make sure we get the answers right.' The investigation was unlikely to take another 12 months, Steward said, but it would take 'a little bit longer'.

Megan Butler, director of supervision at the FCA, urged investors to register a complaint about Woodford with their broker or the Financial Ombudsman if they wanted to, explaining they did not need to wait for the outcome of the probe.

The FCA also faced a grilling over investment scam adverts which are rife on Google and other social media platforms.

In a sign of his own frustration with the tech giants, the FCA's chairman Charles Randell searched for 'high return investments' on Google during the press conference and stated that almost all of the top results returned by the search engine were 'obviously scams'.

He added: 'Whatever Google is doing [to verify these adverts], it's clearly not good enough.'

Butler also raised concerns that customers of legitimate firms could be harmed by an impending wave of failures, with 'hundreds' of firms close to collapse due to the Covid-19 crisis.

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