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Link Group faces another £50m fine from City Watchdog for its role in the Woodford scandal after being hit by a £306million recovery plan
- FCA has issued a draft warning to Link Group
- It gives Link the opportunity to solve or challenge the case with the FCA
- Link is also facing a £306m fee for handling the fund
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Link Group faces a £50 million fine from the Financial Conduct Authority for its handling of the Woodford Equity Income fund.
It comes just a week after the regulator confirmed Link would have to pay up to £306 million in damages to investors of the fund, which collapsed in 2019.
Woodford’s fund was one of the most popular among savers with recommendations from investment platforms such as Hargreaves Lansdown, growing it to over £10 billion at its peak.
The FCA could impose a £50m fee on top of the £306m recovery from Link, the company responsible for overseeing Neil Woodford’s funds
Thousands of clients were locked out when Link Group – the company responsible for overseeing Neil Woodford’s fund – decided to suspend and ultimately close the £3.7 billion Equity Income Fund in 2019 after a string of poor performance and withdrawals from investors.
The regulator has issued Link Fund Solutions a draft warning today and has given the group the opportunity to respond within 14 days.
It gives Link the opportunity to resolve the matter by mutual agreement, after which it can challenge the findings of the FCA before the Regulatory Decisions Committee and Upper Tribunal.
Today the FCA said: ‘The FCA’s priority is the protection of consumers and the integrity of the UK’s financial system. Now that the investigation into LFS has been completed, it is good to continue it by issuing a draft warning.”
“The FCA is focused on ensuring that the appropriate funding is in place so that affected consumers have access to as much redress as possible.”
The proposed fine is in addition to the £306 million fee likely to be imposed for WEIF’s ‘failure in managing liquidity’.
The FCA stressed that the report is not a final decision and Link will be given an opportunity to respond and challenge the findings.
Further investigations continue, with the regulator noting that multiple parties are still under investigation “and they will consider any further deficiencies that could adversely affect investors”.
The proposed fine, in addition to the story announced last week, will be good news for savers who have been waiting for answers for three years.
Ryan Hughes, head of investment partnerships at AJ Bell, said: “With this news coming so soon after the potential £306 million story announcement, investors affected by the Woodford Equity Income Fund saga will be increasingly hopeful that this sad episode is getting closer.
“After three long years, investors have patiently waited for the FCA to figure out what went wrong and hopefully introduce some form of investor compensation. Looks like they’re finally getting somewhere.’
As Link grapples with the fallout from the Woodford episode, he faces a takeover bid from Canadian software company Dye & Durham.
Last week, D&D said it had received a warning from the FCA saying it would not approve the acquisition unless D&D promised to cover any “refund and/or reparations” Link had to pay.