Watchdog under scrutiny for not having intervened in the Woodford savings scandal
The City regulator faces sharp criticism for its perceived inaction over the Woodford savings scandal.
Industry figures question why the Financial Conduct Authority (FCA) did not act sooner to protect investors.
The fund manager was sacked yesterday from running his flagship Equity Income fund, which will now be shut.
Downfall: Fund manager Neil Woodford was sacked yesterday from running his flagship Equity Income fund, which will now be shut
Its investments will be sold, probably meaning heavy losses for savers.
The first warning flags were raised in 2017, when the FCA noted Woodford Equity Income was investing in an increasingly large proportion of difficult-to-sell, or illiquid, stocks.
This contributed to the fund’s downfall, as Woodford wasn’t able to sell the illiquid holdings fast enough to raise cash for investors heading for the exit.
Bank of England governor Mark Carney yesterday said the rules which govern funds need reform.
The Bank is reviewing fund liquidity rules along with the FCA. James McManus, of online wealth manager Nutmeg, said: ‘Consumers might rightly be wondering why the FCA didn’t step in sooner.’
Woodford also tried to dodge the liquidity rules by listing some stakes on the obscure Guernsey stock exchange.
Mark Northway, of investor group Sharesoc, said: ‘That was definitely a strong warning sign that Woodford was potentially sidestepping the rules.’