FCA gives disgraced fund manager Neil Woodford stark warning after he hinted of a comeback

From: RegTech Analyst

The UK’s top financial markets watchdog has warned disgraced fund manager Neil Woodford that his announced comeback is reliant on him passing a character assessment.

The Financial Conduct Authority (FCA) made the statement after Woodford apologised for the collapse of his former investment company in a Sunday Telegraph interview, adding that he planned to launch a Jersey-based new fund focused on biotech assets named Woodford Capital Management Partners.

“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 announcement came 18 months after his former fund, the Woodford Equity Income Fund, collapsed in a blaze of bad market bets that is still being investigated by the FCA and that campaigners say left 300,000 people “scrabbling to make ends meet”.

“We have noted the recent comments by Neil Woodford on his future business plans,” said Mark Steward, director of enforcement and market oversight at the FCA.

He added that the new firm “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,” said Steward. “That includes, for example, the sustainability of the firm’s business model and the fitness of its management.”

The FCA is in contact with the Jersey Financial Services Commission. The two organisations have agreed to share information on any application made in in each regulator’s respective jurisdiction.

Commenting on the ongoing investigation into the implosion of the Woodford Equity Income Fund, Steward said “there has been some impact on accessing certain documents and witnesses during the pandemic.”

In response to those affected parties complaining that the investigation may be taking too long, Steward said he recognised the frustration caused by the delays.

“They rightly look to us to provide those answers,” he said. “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.”

Woodford’s announcement about his comeback has also rattled activists who have called for an independent inquiry.

Activists Gina Miller and Alan Miller, co-founders of the True and Fair Campaign, which seeks improvements to consumer protection standards, wrote to the Treasury Select Committee on Tuesday calling for the investigation.

“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 activists said in a letter seen by the BBC.

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