JEFF PRESTRIDGE: Two years on… Woodford still has last laugh

This Thursday marks the second anniversary of the suspension of Woodford Equity Income, once popular with hundreds of thousands of investors looking to build long-term wealth, but a fund no more. 

A £3.7billion fund, destroyed by a toxic mix of gross investment mismanagement, inept supervision and a dollop of bad luck.

It will be an anniversary that will not spark any ringing of church bells, though the main culprit in this sorry saga – fund manager Neil Woodford – may inwardly smile from his multi-million pound home in Salcombe, Devon, as he has yet to be held to account for his part in the crushing of so many retirement dreams.

No justice: : Neil Woodford intends to launch a new fund

For those 400,000 investors who had hard-earned money tied up in the fund, Thursday will merely remind them of the losses – up to 50 per cent – they suffered. 

After being suspended in June 2019, following a request from Kent County Council for its £263million stake back which the fund could not fulfil, Equity Income was broken up.

This crystallised losses for investors. It was also the beginning of the end for Woodford Investment Management, the Oxfordshire-based business set up by Woodford, who throughout the early 2000s at investment house Invesco Perpetual seemed to possess a Midas touch.

The anniversary will also remind investors of the huge injustice they have been dealt. An injustice perpetuated by a City regulator that has so far failed to hold anyone responsible for one of the biggest investment calamities in recent years. 

Not 61-year-old Woodford, who unbeknown to most investors had run Equity Income as a quasi-healthcare fund investing in risky assets. In the run-up to the fund’s suspension, it had 40 per cent of its assets in illiquid investments.

Not wealth manager Hargreaves Lansdown, which aggressively promoted Equity Income as a best-buy right up until its closure. And not those companies such as Link, which were paid handsomely to safeguard the interests of investors, but failed to do so by giving Woodford free rein over what he invested in.

On Friday, in a letter to the Treasury Select Committee, the Financial Conduct Authority rubbed salt into the wounds of investors when it confirmed its two-year investigation into the events surrounding the suspension of Equity Income was still crawling along at the speed of a tortoise – and would not be completed until the end of the year. Even then, it might not be until the end of 2022 that any disciplinary action is announced.

One long-suffering investor told The Mail on Sunday: ‘After two years, the FCA’s enquiry into Woodford, Link and Hargreaves Lansdown has yet to result in it coming up with a single word of worthwhile comment or rebuke. As for Neil Woodford CBE, he remains free to set up another investment company.’

In recent weeks Woodford representatives have been touting details of a new healthcare fund that Woodford intends to launch through his new business WCM Partners.

The investor continued: ‘It is important justice is done. Some 400,000 investors have lost – and are still owed – millions of pounds.’

Alan Miller, co-founder of wealth manager SCM Direct, has done more than most to shine a light on the regulator’s failure. He has called for an independent investigation along the lines of the one that led to the Government awarding £120million of compensation (yet to be paid) to victims of the London Capital and Finance mini-bond scandal.

On Friday, he told The Mail on Sunday it was ‘a gross dereliction of duty’ that the regulator had yet to complete its investigation. 

He added: ‘Investors have lost more than £1billion, yet no one has taken responsibility. Not a single person in any company or regulatory body who may have been culpable has been suspended or lost their job or had to pay a fine.’

It’s a view shared by Philip Case, an investment consultant from Bristol. He says the regulator ‘missed more red warning flags about Woodford than are stored at Labour Party HQ’. This, he believes, explains why it has been so tardy with its investigation – it doesn’t want to admit culpability.

Both Miller and Case believe all the parties involved in this investment wrong should be forced to contribute to an investor compensation fund. But they fear this is some way off because of the regulator’s reluctance to lance the boil. So investors may have no choice but to put their faith in expensive litigation specialists. 

Several have already launched legal actions either against Link or Hargreaves Lansdown to recoup investor losses. ‘The longer the Woodford debacle drags on, the greater the damage to the industry’s reputation,’ said Miller. 

This post first appeared on Dailymail.co.uk