Woodford fund administrator could have to pay £306m in compensation, says FCA

theguardian.com:

The administrator of the failed fund run by the former star stockpicker Neil Woodford could be forced to pay investors up to £306m in compensation, the City regulator has said.

The Financial Conduct Authority (FCA) said on Monday that it was ordering the fund’s administrator, Link, to ringfence the sum as part of conditions related to its takeover by Canadian cloud-based software company Dye & Durham.

The money could eventually be used to help compensate the 300,000 investors who were affected by the Woodford Equity Investment Fund’s (WEIF) collapse three years ago, including those who lost their life savings following its failure.

It is the first time that the regulator has revealed any penalty related to the collapse of Woodford’s failed fund.

Link was responsible for monitoring and supervising the investments executed by Woodford before the fund failed in October 2019.

The regulator said in a statement on Monday evening that it was likely to force Link Fund Solutions (LFS) to pay a “financial penalty and/or consumer redress” as part of its investigation into the fund’s suspension and eventual collapse.

“The FCA’s current view is that the redress payment LFS could be required to pay may be up to £306m. This redress proposal reflects the FCA’s current view of LFS’ failings in managing the liquidity of the WEIF,” it said in a statement.

“It does not reflect any amount which may be owed to anyone else, including members of the fund, as a result of potential wrongdoing by other parties.”

The watchdog stressed that the figure was provisional and that Link could challenge any financial penalty levied by the FCA.

The equity fund was worth more than £10bn at its peak, but suffered from several poorly performing investments in companies