UK Edition
FCA urges Neil Woodford to waive fee on suspended Equity Income fund
City watchdog the Financial Conduct Authority (FCA) has joined those calling for under-fire fund manager Neil Woodford to waive his fees for his Equity Income fund while it remains suspended.
Earlier, Telegraph Money reported how Woodford Investment Management had refused to waive the fee on its suspended flagship fund.
Investors will continue to pay the fund’s annual management fee, which is 0.75pc a year if the fund is bought via most investment platforms, despite the fact that they cannot make any withdrawals following the suspension of dealing on Monday.
Speaking on Radio Four's Today show, FCA chief executive Andrew Bailey said Mr Woodford "should consider his position" in regards to his fees, but stopped short of demanding that the manager waive his fees.
He added that Mr Woodford "has his work cut out" to get his fund "back into a position where there can be orderly trading".
The fund manager’s decision to keep charging the fee contrasts with the approach taken by Hargreaves Lansdown, Britain’s biggest investment platform, which has waived its own fee of 0.45pc a year on its customers’ holdings in the Woodford fund while the suspension remains in place.
Hargreaves said it had urged Woodford to follow its example but had been rebuffed.
“We spoke to Neil Woodford and his team and urged them strongly to join us in waiving the fee,” a spokesman for Hargreaves Lansdown told Telegraph Money. “We said it was the right thing to do but Woodford said no.”
Nicky Morgan, who chairs Parliament’s Treasury Select Committee, also called for the company to waive its fee.
“Investors in the Woodford fund have been locked out of accessing their cash. Yet it has been reported that Mr Woodford is taking in nearly £100,000 in management fees a day,” Ms Morgan said.
“The suspension of trading has provided Mr Woodford with some breathing room to fix his fund. He should afford his investors the same space and waive the fund’s fees while the fund is suspended.”
The fund was suspended to give the manager time to sell the portfolio’s unlisted stocks, which have accounted for an increasing proportion of the fund as it has shrunk in response to withdrawals by investors. Unquoted stocks take far longer to sell than their quoted counterparts because a buyer has to be sought.
The suspension will be monitored on a daily basis and will be formally reviewed after 28 days. This newspaper understands that the fund may remain suspended for more than a month.
Woodford’s other “open-ended” fund, Income Focus, and his investment trust, Patient Capital, have not been suspended.
A spokesman for Woodford Investment Management said: “The fee [on the Equity Income fund] remains unchanged.”
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