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Anger as shamed fund boss Neil Woodford reveals career restart

Anger as shamed fund boss Neil Woodford reveals he is to restart his career just two years after 500,000 clients were hit when his business failed

  • Up to 500,000 were affected when Neil Woodford’s business failed in 2019
  • Events leading up to the collapse are being investigated by City regulators
  • Despite, Mr Woodford announced he is preparing to launch a Jersey-based fund

Savers who lost thousands when Neil Woodford’s empire collapsed have voiced their dismay after the disgraced fund manager revealed he plans to start over again.

Up to 500,000 were affected when the 60-year-old’s business failed in 2019, leaving many with huge losses and their remaining cash tied up in investments that were difficult to sell.

Some £200million is still owed to investors, according to stock broker AJ Bell.

Those who backed Mr Woodford’s equity income fund from the start are sitting on losses of more than 25 per cent.

The events leading up to the collapse are being investigated by City regulators, while a legal battle is under way to secure compensation for savers. 

Neil Woodford announced yesterday that he is preparing to launch a Jersey-based fund called Woodford Capital Management Partners with business partner Craig Newman.

Despite this, Mr Woodford announced yesterday that he is preparing to launch a Jersey-based fund called Woodford Capital Management Partners with business partner Craig Newman.

Industry experts said the news was likely to anger thousands of embattled investors who have been left financially scarred by the scandal. Many were enraged about him continuing to charge a total of £60,000 per day in management fees while they were unable to pull their money out.

Ken Goodwin, 73, and his wife Margaret lost between £35,000 and £40,000 of a £75,000 investment in Mr Woodford’s fund.

The retired computer software technician, from Leicestershire, said: ‘I don’t appreciate him setting up a new fund at all. He took risks gambling with other people’s money, which was not what it said on the box.’

Retired project manager Brian King invested £10,000 and lost around £3,000. The 79-year-old, who lives in Cambridgeshire with his wife Sylvia, said: ‘I don’t think I would ever want to invest any money with him again.

‘But like a lot of things, somehow, these people always manage to get the money and keep going. I lost thousands of pounds and am still waiting for money.’

In a tearful interview with The Sunday Telegraph, Mr Woodford said he was ‘very sorry for what I did wrong’ but insisted he could not be blamed for the suspension. He said: ‘I can’t be sorry for the things I didn’t do. I didn’t make the decision to suspend the fund, I didn’t make the decision to liquidate the fund.’

Industry experts said the news was likely to anger thousands of embattled investors who have been left financially scarred by the scandal

He added that he did not want to ‘hide away and beat myself up about things that happened the best part of two years ago’. He also claimed that if backers had stayed with him they would now be ‘enjoying the fruits of that faith and trust in me as a fund manager’.

Mr Woodford’s fund empire collapsed in October 2019 after hordes of backers tried to exit but were unable to receive their cash. This was because he had ploughed it into several unquoted or ‘illiquid’ investments, which are difficult to sell quickly.

Link Fund Solutions, the administrator, sacked Mr Woodford and closed the fund, meaning investors could not withdraw their money at will. Instead they have been paid out in tranches based on what has been recouped from selling the remaining assets. Many suffered big losses to their life savings as a result.

Ryan Hughes, of AJ Bell, said: ‘There will be little sympathy for Woodford. He clearly hopes that much of the emotion and fury that he has faced over the past two years will disappear.

‘However, given the broader damage in trust and confidence that this whole affair has caused to the investment industry, it looks unlikely that investors of any kind will find it so easy to forget.’ 

Commentary by Alex Brummer, City Editor

The return of Neil Woodford to investment management just 18 months after the crash of his £15billion empire – leaving as many as 500,000 ordinary savers nursing big losses – will be a source of anger and astonishment nationally.

And the idea that anyone should have sympathy for this self-serving egotist because he felt compelled to sell his £30million Cotswolds estate – with its stable of show-jumping horses – in the aftermath of the collapse is risible.

Yet in his interview in the Sunday Telegraph, a lachrymose Woodford lashes out at everyone except himself – before shamelessly promoting his new venture.

He acknowledges that many people wouldn’t touch him with a ‘ten-foot disinfected barge pole’ – and he’s right.

Savers who lost out – including this writer – are still waiting for an explanation as to why regulators failed to intervene as the Woodford empire headed for the buffers in the spring of 2019.

The full and urgent inquiry demanded by both the Commons Treasury Select Committee and the Treasury itself has yet to happen.

Meanwhile, the Mail’s requests to the City regulator, the Financial Conduct Authority, for updates on the state of its probe have, so far, met with a stonewall.

For more than two decades at City giant Invesco Perpetual, Neil Woodford was regarded as an investment genius, having turned £1,000 into £25,000 for those savers who stuck with him for a generation.

Neil Woodford acknowledges that many people wouldn’t touch him with a ‘ten-foot disinfected barge pole’ – and he’s right

So it was not surprising that when he struck out on his own in 2014, his empire grew fast.

That growth was aided and abetted by the unquestioning backing of investment platform Hargreaves Lansdown which exposed a third of its nearly one million clients to Woodford.

As his own boss, there were few constraints on where Woodford invested client money. He piled into unpopular quoted shares, such as doorstep lender Provident Financial, and dozens of unknown start-ups in biotech and science-based companies despite having unproven expertise in this area.

When the performance of his investments failed to live up to expectations, shrewd investors rushed to get their money out.

A crisis was triggered in June 2019 when Kent County Council’s pension fund sought to withdraw £250million from the Woodford fund.

The cash wasn’t there and the fund was frozen. The Council and its pensioners took a hit of £63million, and hundreds of thousands more were suddenly unable to access their money. 

In his first interview since the collapse, Woodford, 60, accuses the administrator, Link Fund Solutions, of acting too hastily in suspending trading in his flagship Woodford Equity Income Fund and closing it down.

If anything, Link and the FCA acted too slowly. Action should have been taken as soon as cash started to flood out.

Woodford behaved like a gambling addict who thinks that his luck will turn but runs up bigger losses. t the peak of his troubles in 2019, he tried a series of desperate gambits to keep his funds from breaching regulations.

He dumped unquoted investments from his main fund into his Patient Capital fund at over-ripe prices.

He also supported the decision of some of the biotech firms in which he was invested to float on the virtually moribund Guernsey stock market.

This enabled Woodford to count them as liquid, easyto-dispose-of assets. But so suspicious was the Guernsey exchange that it notified the FCA.

Now, the big question for savers, who have lost at least 25 per cent of their money in the main Woodford Equity Income Fund, is how on earth can someone who has done as much harm to Britain’s savings culture make such a rapid return to investment management?

An FCA verdict is still required on Woodford’s personal culpability and the roles of Hargreaves Lansdown and wealth management adviser St James’s Place which sent so much money in the failed guru’s direction.

Indeed, the lack of urgency and intervention by the FCA itself has still to be established. One thing is certain: the FCA and the Bank of England, which is responsible for financial stability, cannot allow Woodford to return to active advice and management.

Incidentally, at the time of the Woodford implosion, the chief executive of the FCA was one Andrew Bailey who has since moved on to greater things as governor of the Bank.

Just last week Bailey found himself entangled in a disagreement with former Appeal Court Judge Dame Elizabeth Gloster over his share of responsibility for the collapse of the smaller mini-bond firm, London Capital & Finance, with 11,000 investors.

But to return to Woodford.

He and his associates say they will only be dealing with ‘professional investors’ not ordinary retail savers in their new venture.

The distinction is ridiculous. Professional investors, such as pension funds and insurance companies, are harnessing our money.

Woodford and his cohort must be stopped before they cause more damage.

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