Pressure is mounting on the City watchdog over its stalled investigation into the collapse of Neil Woodford’s investment business, after MPs called for the government to step in and order a judicial review unless the Financial Conduct Authority hands over its inquiry to an independent judge or QC.
Mel Stride MP, the chair of the Commons Treasury select committee, said on Thursday that the FCA needed to set out when the investigation would conclude.
The regulator began its inquiry in June 2019, the same month Woodford’s flagship fund was suspended. But it has yet to publish any findings, with the FCA blaming the pandemic for its difficulties in accessing documents and witnesses.
Woodford revealed last weekend he planned to return to investment management, prompting outrage from investors and concern from regulators. Campaigners say the one-time star investment manager’s previous venture left more than 300,000 small investors nursing losses initially estimated at about £1bn.
“As the FCA’s investigation still continues over 18 months after the fund was suspended, the reports of the new fund may understandably be of concern to investors who previously lost out,” Stride said. “The FCA should set out when we can expect its investigation to conclude.”
The FCA has responded by saying Woodford still faced the outcome of a regulatory investigation and would need authorisation before returning to investment management.
There is growing unhappiness in some quarters about how long the FCA’s investigation is taking and whether its remit may be too limited.
On Thursday, the fund manager and activist Gina Miller called for the regulator to cede control and appoint an external investigator.
“The only choice for the new head of the FCA is to hand wherever they have got to in their investigation to an independent judge or QC, and widen the scope to include the FCA,” Miller told the Guardian.
She claimed the “rushed-out statement” from the FCA “appears to indicate they are turning a blind eye to their own regulatory actions, or lack thereof, in Woodford. Even if this were to be included, which I doubt, they shouldn’t be allowed to investigate themselves.
Miller – who is best-known for mounting a legal challenge over Brexit, but has also campaigned on consumer protection standards through her True and Fair campaign – indicated that the investigation should take a similar form to the inquiry carried out by the former high court judge Dame Elizabeth Gloster into the regulation of the scandal-hit investment firm London Capital & Finance.
If the FCA did not hand over the investigation and widen its remit, Miller said the Treasury should step in and request a judicial review, adding that those who had lost money in the Woodford debacle should not have to club together to take legal action.
She also said it was important that any independent judge or QC looked at “all links in the chain” – including distributor firms and investment platforms such as Hargreaves Lansdown and St James’s Place.
Earlier this week Miller and her husband and business partner, Alan Miller, wrote to the Commons Treasury committee about the issue, saying: “We believe it ought to be a very serious source of public policy concern that high-profile individuals such as Mr Woodford can be allowed to recommence trading, with the slate ostensibly wiped clean, when over 300,000 people … are scrabbling to make ends meet after seeing their life savings decimated.”
The fund manager Terry Smith – in charge of the £22.6bn Fundsmith Equity fund – also weighed in, telling the trade publication Interactive Investor: “I’m a believer in human redemption … But to attain redemption, one of the very first things you have to do is be afflicted with painful personal knowledge of what went wrong, and very publicly tell people that you have reached that conclusion and that you are sorry, and what you would change about it.”
In its statement issued just before 9pm on Tuesday, the FCA said “any comment about the scope of this ongoing investigation is purely speculation; we have not confirmed who or what we are investigating”.