Woodford Saga continues as FCA decision faces legal challenge

The long-running case of Neil Woodford and his investment fund has entered a new phase, as the Financial Conduct Authority’s (FCA) decision to ban him from managing retail funds and impose substantial fines is being contested. The matter will now proceed to the Upper Tribunal, where both factual and legal arguments are expected to be vigorously tested.

The FCA’s findings state that Woodford Investment Management (WIM) failed to maintain an appropriate liquidity profile for the Woodford Equity Income Fund (WEIF), leading to its suspension and eventual liquidation. According to the FCA, WIM prioritised Mr Woodford’s investment strategy over prompt action to address liquidity concerns, resulting in a deterioration of the fund’s liquidity position.

One of the core disputes lies in the allocation of responsibility for monitoring the fund’s liquidity. Caroline Black, consultant at Gherson Solicitors, commented:

“There seems to be a fundamental disagreement in who’s responsible for monitoring and reviewing the liquidity position of the fund: Woodford’s view is that it was Link’s responsibility and the FCA is saying ‘no it’s not”.

She added that Woodford claims he relied on the risk and compliance function of the WEIF to escalate any issues, whereas the FCA asserts that he should have been personally supervising the position.

This case raises important questions about the scope of responsibility under investment management agreements, the adequacy of liquidity monitoring frameworks and the role of regulatory oversight in preventing fund collapses.

As the matter proceeds, the Tribunal’s decision could have significant implications for fund managers, authorised corporate directors and compliance functions across the UK investment industry.

Featured in the FT Adviser article: Woodford saga continues after FCA decision is contested

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