Woodford Investment Management: FCA Decision Notice Published

On 5 August 2025, the Financial Conduct Authority (“FCA”), published its Decision Notices  following a lengthy investigation into Neil Woodford and his former firm, Woodford Investment Management (“WIM”). 

This latest decision follows the FCA issuing a warning notice against Woodford in April 2024.

This ruling marks an important moment for the UK investment industry, not least due to the high profile of the individuals and institutions involved but also for its implications for fund governance, investor protection, and regulatory oversight. 

Background

Neil Woodford founded WIM in 2014 and launched to a fanfare of publicity the flagship Woodford Equity Income Fund (“the Fund”).  At the time he was widely regarded as a fund management super star having enjoyed significant financial success as a fund manager for Invesco Perpetual.  

However, in 2019, amidst growing concerns about illiquidity within the Fund WIM was forced to suspend redemptions.

Investors were locked out of their savings, causing some public outcry and media scrutiny with the fund being suspended in June 2019 and ultimately being wound up; the collapse cost hundreds of thousands of investors sizable portions of their investments (although investors did receive some compensation through the redress scheme contributed to by the parent company of Link Fund Solutions, the administrator of the Fund).

Investigation

In response to the significant investor losses and the public impact of the Fund’s collapse, the FCA began an investigation. 

The FCA sought to determine the extent to which regulatory breaches, mismanagement, or other failures may have contributed to the Fund’s failure and whether any parties involved had violated principles of fair treatment, transparency, and prudent management.

The FCA’s investigation lasted several years and required the examination of a vast number of communications, documents, and transaction records. 

The complexity of the case and the issues at stake meant that the outcome of the investigation were likely to have significant industry impact.

Key Findings:

The decision delivers a clear and detailed account of the FCA’s findings and the rationale for its enforcement action. 

Central to the FCA’s ruling are several key points:

• Failure to Manage Liquidity: The FCA determined that WIM failed to maintain adequate liquidity in its flagship Fund. This lack of liquidity meant the Fund was unable to meet redemption requests from investors when market conditions changed and this directly contributed to the Fund’s suspension and subsequent wind-up.
• Poor Disclosure Practices: The FCA highlighted that communications with investors did not adequately reflect the true nature of the Fund’s holdings or the heightened risks associated with its illiquid investments. This, the FCA asserted, amounted to a breach of the duty to treat customers fairly.
• Governance Failures: The FCA’s ruling also emphasised shortcomings in the Fund’s governance structure, including insufficient oversight by the board and external compliance officers. The FCA pointed to systemic weaknesses that undermined the effectiveness of internal controls and risk management.
• Responsibility of Senior Management: The FCA’s decision directly implicates Neil Woodford as senior manager responsible for the Fund’s strategic direction. The ruling found that Woodford’s decisions and the culture fostered under his leadership contributed materially to the Fund’s mismanagement.

Consequences

The FCA’s decision imposes substantial penalties and serious sanctions against both Neil Woodford and WIM. 

Among the principal actions outlined in the ruling are:

• Financial Penalties: The FCA levied very significant fines against both Mr Woodford (£5,888,800) in his personal capacity and against WIM (£40,000,000), reflecting the scale of financial damage caused to investors and the seriousness of the breaches identified.
• Ban from Regulated Activity: Mr Woodford has been prohibited from holding senior management positions or conducting regulated activity within the UK financial sector for an indefinite, subject to future review.
• Investor Compensation Scheme: The FCA has directed the establishment of a redress scheme to compensate investors with Woodford who were affected by the breaches and the scheme details are to be overseen by an independent administrator.

Steve Smart, joint executive director of enforcement and market oversight at the FCA, said: 

“Being a leader in financial services comes with responsibilities as well as profile.

“Mr Woodford simply doesn’t accept he had any role in managing the liquidity of the fund.

“The very minimum investors should expect is those managing their money make sensible decisions and take their senior role seriously. Neither Neil Woodford nor Woodford Investment Management did so, putting at risk the money people had entrusted them with."

Commentary

There has been much reaction to the FCA’s decision following their long running investigation which is hardly surprising given the high-profile nature of the personalities involved and the amount of people affected by the issue.

The FCA’s thoroughness and the clarity with which they articulated the duties owed to investors has been met positively in the main however it must be noted that the investigation took a significant length of time to reach its conclusion (the regulator came in for heavy criticism along the way for the time it took with the investigation)

In addition, the FCA has indicated its intention to consult on new rules around liquidity management, investor communications, and governance standards for fund managers.

However, the case has highlighted the critical importance of transparency regarding fund holdings and risks, as well as the need for robust systems of oversight and accountability. 

As we know, the FCA publicises the outcome of its enforcement actions to send clear messages to the industry as to what it regards as good and bad regulatory practices and conduct and therefore the key messages in the decision notice should be carefully considered by fund managers and others in the industry. The FCA’s ruling is a clear signal to the industry: fund managers must place the interests of investors at the heart of their decision-making.

It should be noted that Woodford and WIM hotly contest the regulator’s findings and have appealed the decision notices to the Upper Tribunal (which will review the FCA’s decisions afresh) where they will each present their case, most probably in 2026 now.   Any findings in the Decision Notices are therefore provisional.