Financial Conduct Authority (FCA) chief executive Andrew Bailey has questioned whether fee discounts negotiated by platform Hargreaves Lansdown (HL) fuelled excessive inflows into the LF Woodford Equity Income Fund (GB00BLRZQB71), which may have compromised Neil Woodford’s investment strategy for the fund.
Mr Bailey appeared alongside FCA chairman Charles Randell at a treasury select committee hearing on 25 June, where he answered questions from committee chair and Conservative MP Nicky Morgan and her counterparts on the suspension of the Woodford fund. Ms Morgan interrogated the chief executive on the roles of Hargreaves Lansdown and Woodford’s fund administrator Link Fund Solutions in the debacle, along with the Guernsey stock exchange, where Neil Woodford listed four previously unlisted holdings in a bid to improve the liquidity of his fund.
The Woodford Equity Income Fund was suspended on 3 June, after its assets under management had shrunk to just £3.7bn, from a peak of £10.2bn in May 2017. The decision to gate the fund came after Kent County Council sought to redeem its £263m mandate with the beleaguered fund manager in May.