Neil Woodford, the former investment star who once presided over a £10 billion equity fund, is now facing legal action from the UK's Financial Conduct Authority (FCA). The FCA is suing Woodford and his W4.0 company, registered in the United Arab Emirates, for allegedly offering unauthorised investment advice online. This comes as no surprise, given the FCA's previous ban on Woodford from holding senior manager roles and managing funds for retail investors in the UK, following the collapse of his popular equity fund in 2019. Woodford's fund suffered from several poorly performing investments, including estate agent Purplebricks, finance company Burford Capital, and doorstep lender Provident Financial. The situation was exacerbated by Woodford's decision to invest in private, unlisted companies that were harder to sell. This led to the fund's suspension and eventual collapse, with investors losing at a steep loss. Woodford resigned in October 2019 and closed his investment company, with administrators later winding down the fund and returning money to investors. The FCA's fine and financial services ban were issued last summer, with the regulator stating that Woodford was not a fit and proper person to manage open-ended funds due to his lack of competence, capability, and reputation. Woodford and his investment management company have vowed to challenge the FCA's decision in the upper tribunal, despite the regulator's findings that Link Fund Solutions, the company in charge of the fund's liquidity, failed to act with due skill, care, and diligence. The FCA's penalties and ban will not formally apply until after the hearing, but Woodford would still need to apply for fresh authorisation for any new senior roles. In the meantime, Woodford has launched a subscription-based investment service called W4.0, allowing investors to download and enact his strategies via their own accounts. This move raises questions about whether Woodford is operating within the law, given the FCA's previous concerns and the need for authorisation. The FCA has stated that it is engaging with Woodford to ensure his activities do not require their authorisation, and that he would need to apply for such authorisation or risk breaking the law. The outcome of this legal action will be closely watched, as it could have significant implications for the future of investment advice and the reputation of the investment industry in the UK.
