The UK’s financial regulator, the Financial Conduct Authority (FCA), has issued fines approaching £46 million against fund manager Neil Woodford and Woodford Investment Management (WIM) for serious failings in their handling of the Woodford Equity Income Fund (WEIF). The regulator has also decided to ban Mr Woodford from holding senior management positions or overseeing retail funds in the future.
According to the FCA, Mr Woodford faces a penalty of £5.9 million, while his firm, WIM, has been fined £40 million. Both parties have referred the decision to the Upper Tribunal, which means the sanctions remain provisional until a final ruling is made.
The WEIF, once one of the UK’s most popular retail investment funds, reached a peak value of £10.1 billion in May 2017. By June 2019, however, its value had collapsed to £3.6 billion and the fund was suspended, leaving thousands of ordinary investors unable to access their savings. The FCA concluded that between July 2018 and June 2019, Woodford and WIM engaged in unreasonable and inappropriate investment activity. In particular, they sold more liquid assets and increased exposure to illiquid holdings, leaving the fund dangerously exposed to redemption pressures.
At the point of suspension, only 8% of the fund’s investments could be liquidated within seven days, far short of the regulatory requirement to allow redemptions within four. The regulator argued that as redemptions grew and the fund’s value deteriorated, neither Woodford nor WIM acted decisively to address the liquidity crisis. Instead, those who remained invested were placed at a disadvantage compared to early redeemers.
The FCA also highlighted Woodford’s failure to take responsibility for the fund’s liquidity management. Despite his senior role, he maintained a “defective and unreasonably narrow understanding” of his obligations, even during interviews with regulators. He further failed to ensure that WIM provided proper oversight of its relationship with Link Fund Solutions, the WEIF’s authorised corporate director, despite Link raising repeated concerns about liquidity.
Steve Smart, joint executive director of enforcement and market oversight at the FCA, was blunt in his assessment:
“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 collapse of the WEIF has been one of the most high-profile investment scandals of the past decade. Thousands of retail investors were locked into the fund after its suspension, sparking widespread anger and scrutiny of both fund managers and regulators. The FCA had previously secured a £230 million redress scheme against Link Fund Solutions, which oversaw the fund’s administration.
Although Woodford and WIM dispute the FCA’s findings and will argue their case before the Upper Tribunal, the regulator has left little doubt about the seriousness of the failings. The case stands as a warning about the importance of responsible fund management and robust liquidity oversight, particularly in funds marketed heavily to ordinary savers.
🔗 Read the full FCA press release here: FCA issues fines of nearly £46m for failures managing the Woodford Equity Income Fund
