Financial Services Compliance Blog - Thistle Initiatives

FCA to impose £50m fine on Link Fund Solutions over Woodford failings

Written by Keith Maner – Compliance & Technical Manager | Oct 28, 2022 2:57:57 PM

Summary

The FCA has issued Link Fund Solutions with a draft Warning Notice proposing a £50m penalty fee in addition to its already announced £306m redress payment.

In an update issued following an announcement by Link Group Stock Exchange, the FCA confirmed it had issued the draft Warning Notice to Link Fund Solutions, giving it 14 days to respond. The Notice gave LFS an opportunity to resolve the case by agreement, following which the company would be able to challenge the regulator's findings at the Regulatory Decisions Committee and Upper Tribunal.

The proposed £50m fine did not include any discount for prompt settlement and came on top of to the £306m redress fee already likely to be imposed as a result of LFS’s ‘failings in managing the liquidity of’ the LF Woodford Equity Income Fund (WEIF).

The regulator has clarified that the ‘FCA-determined redress is based on misconduct rather than losses caused by fluctuations in the market value or price of investments.’ It added that multiple parties remain under investigation and that this fine and redress payment do not ‘reflect any amount which may be owed to anyone else, including members of the fund, as a result of potential wrongdoing by other parties.

In its statement, Link Group said it's authorised corporate director would continue to explore all options, adding that this might include ‘engaging in settlement discussions with the FCA’ along with making its previously-announced challenge through to Upper Tribunal.

‘Link Group remains supportive of LFSL considering all such options, and notes that LFSL continues to trade profitably with a leading position in its market,’ the statement read. ‘Link Group has not made any commitment to fund or financially support LFSL. Link Group considers that any liabilities relating to the Woodford Matters will be confined to LFSL.’

Link: https://www.fca.org.uk/news/statements/fca-statement-regarding-potential-enforcement-action-against-link-fund-solutions-ltdhttps://www.fca.org.uk/firms/consumer-duty-events