Pitiful justice from the FCA: It took far too long to put Woodford in the stocks, says ALEX BRUMMER
There is satisfaction to be drawn from the ban imposed on Woodford from holding senior management roles and looking after retail investors' cash.
Moreover, Woodford personally will have to cough up £5.8million in fines and his eponymous investment firm some £40million.
Yet the process of delivering verdicts for Woodford savers (including this writer), which started when Andrew Bailey was chief executive of the Financial Conduct Authority (FCA), has been exasperating.
It has taken six long years to reach this point, and one fears that there will be victims of Woodford's nefarious behaviour who will have missed out on seeing the regulator swing into action.
And it is not over yet since Woodford, lawyered to the hilt, is taking the matter to the Upper Tribunal, the FCA's equivalent of the High Court. That means more delays.
Much of the material in the voluminous decision documents relating to Woodford Investment Management and WEIF emerged at the time.
It was known, for instance, that Woodford sought to cover up a lack of liquidity in his funds by transferring assets to the obscure Guernsey stock exchange.
He also sought to shift the blame for what happened to corporate director Link. The FCA found them jointly culpable and Link, now controlled from Down Under, has already paid £230million in restitution for its error.
The rules-based system under which the FCA operates needs to be preserved if retail investors and professionals, such as Kent County Council, are to be protected.
What is intolerable is the bureaucratic faffing which has taken so long to put Woodford in the stocks. In the interim, Woodford still offers his services as a financial adviser.
The FCA has also failed, thus far, to establish how it was that some 300,000 people who invested in Woodford funds were exposed through the Hargreaves Lansdown (HL) platform and its own fund of funds.
HL is now owned by a consortium of private equity investors led by CVC. That is no excuse for escaping culpability and facing up to HL's responsibility for misleading savers.
Musical chairs
Often it is said that the main duty of the chairman is to fire the chief executive. At Diageo, Sir John Manzoni, who took over as chairman early this year, lost little time in disposing of one of the FTSE 100's small gang of women bosses, Debra Crew.
Admittedly, at the time, Diageo's share price was in sharp retreat, falling by 30 per cent.
Authoritative accounts suggest that Crew was ambushed. When she questioned the assertiveness of finance director Nik Jhangiani with Manzoni, she signed her own resignation letter.
The latest results show that, were it not for the Trump tariffs – which cannot be blamed on Crew – the underlying picture was much better than thought with organic sales up 1.7 per cent at £15.1billion.
The vital North American market was still robust with sales up 1.5 per cent. This is despite the trend of Gen Z turning away from alcohol.
Where does this, one wonders, leave Murray Auchincloss, chief executive of BP, in another part of the corporate forest?
New chairman Albert Manifold has ordered a review of the business and costs, and he hasn't even been seated.
What that means for the sensible Auchincloss strategy, already under fire from activist Elliott, one shudders to think.
Tech leakage
No board of directors would dare turn down a bid premium of 104.9 per cent unless it came from the Ayatollah himself.
So British scientific instrument maker Spectris has been able to sit back as private equity ghouls Advent and KKR fight it out for control, with the latter back in the driving seat.
If the sharp minds at Advent and KKR were able to see the value, where were the British analysts and buy-side investors as Spectris languished in the lower reaches of the FTSE 250?
And doesn't a Labour government, committed to a high-tech future for the UK, worry about the escape of British intellectual property overseas? It should do.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Times
6 minutes ago
- Times
How Gordon Brown's ‘baby bonds' failed to raise a nation of investors
Rachel Reeves wants stubborn savers to embrace investing to earn better returns and boost the economy. The chancellor is looking to rip up red tape to let banks to nudge savers towards the stock market, and is also considering cutting back the cash Isa allowance to ensure more of our savings are invested. However, the New Labour chancellor Gordon Brown also had an ambition to create a healthier savings culture, and it did not exactly turn out as he had hoped. Brown wanted to raise a generation of investors by giving every baby at least £250 to kickstart the habit. When detailing the policy in his 2003 budget, he said: 'The child trust fund symbolises the difference between those who believe in modernising the welfare state and those who wish it to wither away. 'At age 18, on the basis of historic rates of return, the child trust fund will accumulate assets that will enable all young people to have more of the choices that were once available only to some.' The tax-free scheme was designed to encourage parents to invest for their children's future, and all babies born between September 1, 2002 and January 2, 2011 were eligible. In all, 6.3 million accounts were opened, and the government paid £2 billion into the accounts, which could be accessed from 18. Yet child trust funds were scrapped by the coalition government in 2011 and many have since been lost or forgotten. Some investors have even been locked out of their funds. The first children with funds turned 18 in September 2020. The latest available data shows the total value of the funds is about £9 billion. While up to 2.8 million accounts have now matured, of these, about a quarter (670,000) have not been claimed. On average it's estimated that each young person could have an account worth about £2,000. A further study revealed that most of the accounts did not have any money paid into them between April 2023 and April 2024, suggesting they've been abandoned as a savings vehicle. Maike Currie, an investment and savings expert who worked for Hargreaves Lansdown until recently, said: 'Child trust funds were a victim of the age of austerity after the 2008 financial crisis. 'On reflection, they were always doomed to fail — starting with the elaborate name. Many people were put off, thinking these were the preserve of trust fund babies, while others simply did not know about them. 'This simply reiterates the importance of awareness and education if you're to reignite a nation of investors. If the government today fails on getting this right, they will have another flop on their hands with disastrous consequences.' Education about these accounts was lacking — and remains the case, as shown by a trip by Money in April to one school where many pupils had no idea they had a child trust fund. The initial sum of £250 was doubled to £500 for low-income families. Children had a second payment when they reached seven. However, in 2010, the initial payment was reduced to £50, or £100 for lower-income families, and the second payment at seven scrapped. The first payment was abolished entirely in 2011. New parents were also invited to choose a home for the free cash. They could invest it in the stock market (either choosing the investments themselves or selecting a stakeholder version where the investments were chosen by the provider) or choose a savings-style account where interest was paid. If an account was not opened by the child's parent, HM Revenue & Customs set up a stakeholder account on the child's behalf. Many parents never engaged with the scheme. HMRC stepped in on behalf of 1.7 million parents (28 per cent) who failed to find a home for the £250 within the required 12-month period. All HMRC-allocated accounts were investment-based. According to the Share Foundation, a charity that helps to trace unclaimed funds, more than £400 million is sitting unclaimed in HMRC-allocated accounts. More than half of the unclaimed accounts worth £274 million belong to young adults on low incomes. About 55,000 trust funds mature every month and the charity forecasts that nearly £1 billion will be unclaimed for low-income young adults by the end of this parliament. Gavin Oldham from the Share Foundation said: 'Since September 2020, when the first account holders started turning 18, child trust fund owners have been able to withdraw funds or transfer savings into an adult Isa. 'Yet there's an enormous amount of money sitting unclaimed by youngsters, who could use it to go towards tuition fees, a first home or simply to kickstart their own savings for the future.' The charity has matched more than 85,000 young people with their child trust funds, recovering more than £165 million for young adult account owners. The accounts will continue to mature until 2029, when the last children to get a fund will turn 18, but the worry is that many won't be reunited with their money. • NatWest says stolen £8,500 child trust fund is not its problem There were many other criticisms of the scheme. For example, the investment options were limited and expensive. A parliamentary report highlighted that investment charges for managing the funds were 'very high'. Another issue is that no provision was made for children with disabilities who were unable to manage their own finances. A report has previously suggested 80,000 such young people were unable to access their funds without their families going through the Court of Protection — a process that can be costly and time-consuming. If the amount in the fund is relatively small, the legal fees might outweigh claiming the cash. Analysts have looked for positive outcomes. There was some evidence to show that the accounts appeared to have led some parents to open savings accounts for older siblings who did not benefit. However, it found the scheme did not have a statistically significant effect on the rate of savings for children overall. Education is essential when it comes to encouraging people to invest. Many prefer to keep their savings safe in risk-free cash accounts, where they are unlikely to keep pace with inflation. If you have long enough to ride out the ups and downs of the stock market, investing usually results in a much higher return. A £100 monthly investment into the average global equity fund for the past 18 years (£21,600) would today be worth about £52,800, according to analysis by the investment platform AJ Bell. The same £100 a month saved in an average child's savings account over the last 18 years at 2.93 per cent would today be worth about £28,465, according to Moneyfacts. That's 85 per cent less than if the money had been invested. Currie said: 'Education, awareness and ease are the cornerstones to creating a nation of investors or to put it differently: there needs to be a seismic shift in trust, ease and confidence. 'In the UK, investing is still associated with gambling — people must understand that when you're investing you're owning real assets and the potential for future growth. It's also about getting to grips with the concept of risk and understanding different levels of risk — and the hidden risks of holding too much cash against a backdrop of inflation and longer lives. These are big hurdles to overcome to establish a culture of retail investing in the UK.' • How to get a nation of savers investing Laith Khalaf from AJ Bell said that the UK had a long way to go before reaching the investing culture in the US. Khalaf said: 'The US has been a leader in terms of financial products such as unit trust funds, exchange traded funds, trackers and self-invested personal pensions. As a result there is a greater familiarity with investments and probably a greater risk appetite amongst everyday Americans. That's positive for US investors and stocks over the long term, but it's not without its risk.' In the UK there's perhaps not enough risk being taken, with many people holding large sums of cash and never considering the stock market. Khalaf said: 'At least £100 billion is sitting in cash Isa accounts held by savers with £20,000 or more in cash, but no stocks and shares Isa investments. 'The chancellor's efforts to ignite a retail investing revolution are therefore well met. Getting more people to invest in the stock market will be positive for their long-term wealth and for the economy as a whole. In particular a regular investment plan can help reassure those who don't like the full thrills and spills of the stock market because it leads to a smoother journey.' He added that some things needed to be addressed to encourage investing. 'For example, it's nothing short of bizarre that the Treasury wants people to invest in domestic stocks but charges stamp duty of 0.5 per cent on UK share purchases. An investor can buy shares in a US company like Apple with no stamp duty to pay, but if they buy £10,000 of London-listed AstraZeneca shares, they will pay the government £50 for the privilege.' • The Share Foundation is campaigning for the government to start automatically releasing unclaimed CTF funds once account holders turn 21.• You can search for lost CTF funds using a free HMRC-linked search tool. Have your national insurance number to hand. Tayo Olutunde, 22, received a £2,500 windfall last year when he decided to check whether he had a child trust fund account. Tayo, who lives in Leeds and is studying accounting and finance, watched a TikTok video that prompted him to check with his parents about a child trust fund. They remembered setting one up and contributing to it for a time but couldn't remember with which bank. Olutunde said: 'As a family we moved a lot, including abroad. The contributions would have stopped when we went abroad and the paperwork was lost. I came across the Share Foundation who helped me locate where my account was — with NatWest. 'It took a long time to access the money because I didn't know which address was registered with my account, so I kept failing security. Eventually I got through and found I had £2,400. I was shocked.' Olutunder decided to spend about £400 on a holiday to Italy to celebrate his 21st birthday and invested the rest. But he said more needs to be done to educate young people about the world of investing. He said: 'I have a friend who also located his child trust fund recently. He spent most of it on a fast car, which I'm not sure is the best use of the money.' Scott and Julie James were thrilled to receive the £250 from the government for their daughter Holly when she was born in 2009. The couple, who live in Glasgow, decided to invest the sum to start building a nest egg for her future. Scott, 54, who works as a company director, said: 'The government was giving away free money which was great. Sadly the rest of the scheme wasn't quite so impressive. We wanted to invest the money, knowing that stocks and shares perform better than cash over the longer term. 'But at the time we opened the account, there wasn't a huge number of companies to choose from, and those that did offer child trust funds had a limited investment choice and the charges were high.' They opened an account anyway and it was topped up with money from grandparents. But when junior Isas were launched two years later, Scott felt they offered a bigger range of investments and lower charges, so they started saving in one of those accounts instead. Scott says they are still saving for Holly, now aged 16, perhaps to help with a first property purchase or whatever she might need in adulthood. He said: 'The child trust fund was a nice try, but it just didn't work.
BBC News
7 minutes ago
- BBC News
Worcestershire farmer says arson left his family too scared to leave farm
A Worcestershire farmer says his family is now scared to leave their home unattended after a fire, which police are treating as arson, caused £160,000 of blaze at Egghill Farm near Frankley in August 2024 destroyed two barns, two trailers and hundreds of bales of Charles says his family are now so nervous that it will happen again, that they haven't been on holiday together since. "We were insured for the physical costs, but it's the emotional impact that stays with you," he said. Firefighters from Bromsgrove, Redditch, Wyre Forest, Evesham and Northfield spent more than 36 hours tackling the Mercia Police has charged a man with two counts of arson."We're just thankful that the cattle and sheep were out in the fields grazing so they weren't harmed," said farmer Rob Charles. "We've got CCTV and alarms, but we're scared to leave the farm in case it happens again." "My youngest son was terrified and didn't want to go to bed for a week after the fire."He was scared that the man might come back and set fire to the house.""It's not just a place of work, the farm is also our home, and we've not been away together as a family since it happened." The number of agricultural fires in the UK is reducing but the financial costs have risen by more than a third. In 2023/4, according to figures from the Ministry of Housing, Communities and Local Government, there were 409 fires on farms – 87 of which were started were also 4,419 outdoor fires, 40% of which were caused by NFU Mutual say the cost of farm fires increased by 37% to an estimated £110 million pounds in vehicle fires, which are recorded separately, have cost an additional £74 million in the last two years. Farmers have told the BBC that buildings and machinery can be replaced, but the emotional impact can't be and Alison Themans spent 20 years building up their Wenlock Edge Farm Shop business in Much Wenlock but the buildings were destroyed in just a few hours, leaving only their home next door. On May 26th, a fire caused by an electrical fault tore through the shop, butchery and charcuterie. When Peter opened the front door after hearing banging, he was met with a thick wall of smoke. "I opened the door and I couldn't work out what was happening," said his reaction, Alison said she was worried that he was having a heart attack."We went to bed the night after the fire and I couldn't stop thinking about the scale of work ahead of us," she said."I asked Peter if he was certain he wanted to start again, but we both felt we were not ready to retire."Rebuilding the farm shop is due to start in August, and the couple hope to be supplying customers in time for Christmas."We've been overwhelmed by the kindness shown by our friends, neighbours and customers," said Peter. "We could have said that's it, but we didn't want to finish the business in such a sad way, we're determined to start again." In June 2024, almost 200 people had to be evacuated from the caravan site at Hartington Hills Farm in the Peak District. A barn, holiday cottage and biomass boiler were destroyed in the blaze which was caused by an electrical fault. It's cost more than half a million pounds to rebuild the park, which is owned by mother and daughter Susan Green and Amy Dillon."We feel lucky that nobody was killed," said Susan, who had to move into temporary accommodation for five months. "A couple in their 80s were staying in the cottage and, if a camper hadn't raised the alarm, they could have been lost."I just ran out in my nightie, my bedroom was next door to the fire, so I could have died too." "It hurts your heart." Susan lost many personal possessions in the fire, and says she's still recovering emotionally."I've still got that grief there and it's not been let go of yet."The electricity, water and heating supplies were destroyed and the site was closed for ten months. "It's been traumatic but we chose to make it into an opportunity and invested some of our money to upgrade the site," said Amy. "It put us under a lot of pressure, we were keen to get on with it."We're not the sort of people who cry into their soup or moan, you've just got to crack on," says Susan.
Telegraph
7 minutes ago
- Telegraph
‘Leave our kids alone': One parent's anger as school fees rise under Labour
As a small business owner, Emma says the new VAT on private school fees is hitting families like hers hard. 'It's now just under £10,000 pounds for each term in the senior school,' she says. 'By the time we're paying the school fees… My husband and I have paid our taxes. We've absolutely done everything we can.' Instead of spending money on luxuries, she adds, 'my husband and I are putting money into the local economy, paying local teachers… And that's even before you get into all the kind of charity work the school does'. Emma is frustrated by what she sees in school catchment areas. 'There's a moral turpitude to that kind of attitude… renting flats near the school, not even living there to get the residency… How can you live with yourselves?' Meanwhile, private school parents are painted as villains. 'When we get vilified as private school children, parents… I do start to lose the plot a bit.' Her message to the Government is simple: 'Leave our kids alone.' She adds, 'By not sending my two children to state school, I'm saving the Government… about seven and a half thousand pounds per child per year… We're not taking anything away from the state at all.'
