The Financial Conduct Authority (FCA) has issued fines against Neil Woodford and his firm, Woodford Investment Management (WIM), citing mismanagement of the Woodford Equity Income Fund (WEIF).
The regulator has proposed a personal fine of £5.89mn for Woodford and a £40mn penalty for WIM. Additionally, Woodford faces a ban from holding senior management positions or overseeing retail investment funds.
The penalties follow an FCA investigation into liquidity failures at WEIF. While Woodford’s estimated net worth suggests he may be able to pay the fine, it remains uncertain whether the government will successfully recover it.
WEIF, once valued at over £10.1bn in May 2017, fell to £3.6bn before being suspended in June 2019. Most investors were retail customers. When the fund froze, they were left unable to withdraw their capital.
By that point, only 8% of the fund’s assets could be liquidated within seven days—well below regulatory expectations requiring investors to access their money within four days.
According to the FCA, between July 2018 and June 2019, Woodford and WIM made poor investment decisions.
They sold liquid assets and increased exposure to harder-to-sell holdings, compounding the liquidity crisis. As redemptions increased and liquidity deteriorated, the firm failed to adjust its strategy or respond to warnings.
This disadvantaged remaining investors compared to those who had exited earlier.
The FCA’s investigation found that Woodford held a flawed view of his responsibilities. Despite his leadership role, he denied having any duty to oversee the fund’s liquidity.
He also neglected to supervise WIM’s relationship with Link Fund Solutions (Link), WEIF’s authorised corporate director—even after Link raised concerns about liquidity risks.
These findings remain provisional, as both Woodford and WIM have referred the FCA’s Decision Notices to the Upper Tribunal for review. The Tribunal will assess the evidence and make a final determination.
Steve Smart, joint executive director of enforcement and market oversight at the FCA, criticised Woodford’s conduct:
Mr Woodford doesn’t accept he had any role in managing the fund’s liquidity. The minimum investors should expect is sound decision-making from those entrusted with their savings. Neither he nor his firm met that standard.
The FCA has already sanctioned Link over its role in the fund’s collapse, securing a £230mn redress scheme for affected investors.
