Neil Woodford and Firm Fined £46 Million Over Funds Collapse and Banned from City Roles

Neil Woodford, once hailed as a top stockpicker in the UK investment sector, and his now-defunct firm Woodford Investment Management have been hit with a £46 million fine for their role in the collapse of flagship fund. The Financial Conduct Authority has also banned Woodford from any senior role in the City, including the management of funds for retail investors, after concluding that he is not fit and proper to run retail funds.

The downfall of Woodford’s investment empire came in 2019, when the Woodford Equity Income Fund was unable to cope with a surge of redemption requests. On suspension, the fund held £3.6 billion in assets, yet investors eventually recovered £1 billion less than the fund’s value on that day. The FCA determined that Woodford’s tenure between July 2018 and June 2019 was marked by “unreasonable and inappropriate investment decisions”. During this period, his firm disproportionately sold more liquid assets and bought less liquid ones, exacerbating the fund’s liquidity problems.

Woodford personally faces a £5.9 million penalty, while his company is ordered to pay £40 million. The regulator doubled his fine, noting that a lesser sum would not sufficiently deter similar behaviour by others in the industry. Woodford’s high profile and the widespread impact of the fund’s collapse were also cited as factors influencing the penalty.

Despite these developments, the judgments remain provisional, as Woodford has announced his intention to contest both the fine and the ban in the Upper Tribunal. He has strongly denied any personal wrongdoing and claims the FCA will be scrutinised for its own oversight role during the crisis.

At his peak, Woodford attracted over £15 billion from institutional and retail investors after leaving Invesco Perpetual and founding his own venture in 2014. Financial disclosures reveal that in the years leading up to the crisis, Woodford and his co-founder Craig Newman extracted £98 million in dividends from the company, funding a lavish lifestyle including houses and luxury cars.

The FCA found Woodford negligent for failing to accept responsibility for the liquidity management of the fund. Its report makes clear that investors should expect sensible, prudent decisions from those entrusted with their savings — an expectation not met in this case. Meanwhile, campaigners and some MPs are calling for the Cabinet Office to strip Woodford of his CBE, awarded in 2013 for services to the UK economy, in the wake of the harm inflicted on investors.