The Financial Conduct Authority (FCA) has sent Link Fund Solutions a draft Warning Notice following its investigation into the Woodford scandal, proposing a penalty of £50m, which the firm may have to pay in addition to a potential £305m redress to consumers.
Investors in the LF Woodford Equity Income fund had their holdings frozen in 2019 when it was unable to meet redemptions – the portfolio had large holdings in illiquid assets that were hard to trade.
The firm has been in the long process of winding down the fund ever since, but Ryan Hughes, head of investment partnerships at AJ Bell, said that it’s now moving into its final phases.
He said: “Investors impacted by the Woodford Equity Income fund saga will be increasingly hopeful that this sorry episode is getting closer to completion.
“After three long years, investors have waited patiently for the FCA to unearth what went wrong and hopefully put in place some form of compensation for investors. It now seems like they might finally be getting somewhere.”
There are 14 days in which Link Fund Solutions can respond to the draft Warning Notice, which it can challenge with the FCA’s Regulatory Decisions Committee.
The City watchdog recently approved Dye and Durham’s takeover of Link Fund Solutions on the condition that it pays £305m in redress to Woodford investors.
Several other firms are still under investigation for their role in LF Woodford Equity Income fund’s closure and potentially causing a negative impact for investors, so more fines may be yet to come.