The Financial Conduct Authority (FCA) has been asked to clarify its stance on reports regarding Neil Woodford’s intention to open up shop again less than a year and a half after the collapse of his LF Woodford Equity Income Fund and investment company.
The newly established venture Jersey and Buckinghamshire-based Woodford Capital Management (WCM) Partners will reportedly still focus on the potentially illiquid holdings that caused problems for the fund manager in 2019.
This time, however, it seems likely that retail investors will not be given access to the vehicles.
The UK watchdog did not set out a clear course of action on the matter, since the investigation into Woodford Investment Management’s collapse is still ongoing.
But the regulator did say it is in contact with the Jersey Financial Services Commission (JFSC) to share information on any applications made in either jurisdiction by Woodford.
Investigation delayed by pandemic
Mark Steward, director of enforcement and market oversight at the FCA, said: “We have noted the recent comments by Neil Woodford on his future business plans. This statement sets out our position on specific points on which we have been asked for information.
“Since April 2020, when it varied its permissions, Woodford Investment Management is no longer able to offer investment services to retail clients. Woodford’s new business, WCM Partners, would 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. That includes, for example, the sustainability of the firm’s business model and the fitness of its management.
“There are reports that Woodford’s future business proposal may operate out of Jersey. We are in contact with the JFSC and agreed with them that we will both share information on any application made in in our respective jurisdictions – for both a fund or entity.
“We have previously confirmed that we are investigating the events that led to the suspension of the LF Woodford Equity Income Fund. The investigation is being appropriately resourced and is progressing, though there has been some impact on accessing certain documents and witnesses during the pandemic.
“It is important to note that any comment about the scope of this ongoing investigation is purely speculation; we have not confirmed who or what we are investigating, though it is public knowledge that there were a significant number of entities in the chain of operation of the fund.
“That is important for both legal and practical reasons. In complex investigations, for instance, the scope and subjects often change as further evidence comes to light during the investigation,” he added.
Investor frustration
The once-star-manager’s latest business plan has, unsurprisingly, taken investors by storm as they are still trapped in its flagship fund, with some being hit by losses of nearly 50%.
Steward continued: “I recognise the time taken to investigate causes frustration among those affected by a firm or fund failure and who are, understandably, looking for answers. They rightly look to us to provide those answers. As a result, it is vital we investigate thoroughly, and investigations are not limited at their outset.
“Instead, we look at what all the evidence tells us before we make conclusions about what, if any, misconduct has taken place and who is responsible, if it has. It is only then that we can assess what, if any, sanction we should put in place. It is important as the decision-makers on investigations that we do not prejudge their conclusion.”
