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Link Group faces £50m fine from FCA over Woodford scandal

FCA can impose £50m fee on top of £306m compensation for Link, the company overseeing Neil Woodford's funds

Link Group faces an additional £50m fine from the City watchdog for its role in the Woodford scandal after being hit with a £306m reparations package

  • FCA issued draft warning notice to Link Group
  • This gives Link the option to resolve or challenge the case with the FCA
  • Link also faces £306m reparations costs over his handling of the fund

Link Group is facing a £50m fine from the Financial Conduct Authority for its management of the Woodford Equity Income fund.

It comes just a week after the regulator confirmed Link may have to pay up to £306m in compensation to investors in the fund, which collapsed in 2019.

Woodford’s fund had been one of the most popular among savers with recommendations from investment platforms like Hargreaves Lansdown helping it grow to more than £10bn at its peak.

FCA can impose £50m fee on top of £306m compensation for Link, the company overseeing Neil Woodford's funds

FCA can impose £50m fee on top of £306m compensation for Link, the company overseeing Neil Woodford’s funds

Thousands of clients were left out when Link Group – the company responsible for overseeing Neil Woodford’s fund – decided to suspend and eventually close the £3.7bn equity income fund in 2019 after a series of poor performances and investor withdrawals.

The regulator today issued Link Fund Solutions with a draft warning notice and gave the group an opportunity to respond within the next 14 days.

This gives Link the opportunity to resolve the case by agreement, after which he can challenge the FCA’s findings before the Regulatory Decisions Committee and the Upper Tribunal.

Today the FCA said: ‘The FCA’s priority is to protect consumers and the integrity of the UK financial system.’ As the LFS investigation is complete, it should be moved forward by issuing a draft warning notice.

“The FCA is working to ensure that adequate funding is in place so that affected consumers can access as many remedies as possible.”

The proposed fine comes on top of a £306m remedial fee that is likely to be imposed due to WEIF’s “cash management failures”.

FCA stressed that the notification is not a final decision and that Link will have the opportunity to respond and challenge the findings.

Further investigations are ongoing, with the regulator noting that several parties are still under investigation “and will review any further failures that may negatively impact investors.”

The proposed fine, alongside the remedy announced last week, will be good news for savers who have been waiting three years for answers.

Ryan Hughes, head of investment partnerships at AJ Bell, said: ‘With this news arriving so soon after the announcement of a potential £306million repair, investors affected by the Woodford fund saga Equity Income are increasingly hopeful that this sad episode is nearing its end.

“After three long years, investors waited patiently for the FCA to find out what was wrong and hopefully put some form of compensation in place for investors. Now it looks like they might finally be getting somewhere.

As Link grapples with the fallout of the Woodford episode, he faces a takeover bid from Canadian software company Dye & Durham.

Last week, D&D said it had received a warning from the FCA, saying it would not approve the takeover unless D&D promised to cover any “restitution and/or repair payments” Link was made. condemned to pay.

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