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Money'Does anyone at the FCA read the newspapers?' MPs slam City watchdog for failing to probe Woodford - as FCA chief admits the fund that locked in investors had bent the rules

05:26  26 june  2019
05:26  26 june  2019 Source:   dailymail.co.uk

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'Does anyone at the FCA read the newspapers?' MPs slam City watchdog for failing to probe Woodford - as FCA chief admits the fund that locked in investors had bent the rules © Reuters Chief Executive of the Financial Conduct Authority Andrew Bailey

MPs criticised the boss of the UK's financial watchdog today for not acting sooner to ask if City guru Neil Woodford was potentially breaching regulations before investors were locked in to his creaking fund.

Nicky Morgan, chair of the Treasury Select Committee, pointed out to Andrew Bailey, chief executive of the Financial Conduct Authority, that concerns over Woodford's Guernsey dealings which reduced liquidity in his now-frozen Equity Income Fund were aired in a March article by Citywire.

She said: 'Does anybody at the FCA read the newspapers and listen to what's going on in the industry?'

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'Does anyone at the FCA read the newspapers?' MPs slam City watchdog for failing to probe Woodford - as FCA chief admits the fund that locked in investors had bent the rules © Provided by Associated Newspapers Limited FCA chief Andrew Bailey 'Does anyone at the FCA read the newspapers?' MPs slam City watchdog for failing to probe Woodford - as FCA chief admits the fund that locked in investors had bent the rules © Provided by Associated Newspapers Limited MP Nicky Morgan

Mr Bailey, who has been widely touted as the likely successor to Mark Carney as Governor of the Bank of England, admitted the article triggered the FCA's interest in the potential 'regulatory arbitrage' - the shifting around of assets to circumvent regulations that are meant to maintain liquidity in funds and protect investors.

He said: 'Had the whole story come out into the full and they hadn't relied on the rules, I suspect a suspension would have happened sooner, which may have been a better thing ... but it would still have been a suspension (of the fund) I suspect.'

Mr Bailey told MPs he does not believe Neil Woodford's suspended investment fund was following rules for how many tradeable - or liquid - shares it held, due to listing some of his holdings on the Guernsey stock exchange.

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' Does anyone at the FCA read the newspapers ?' MPs slam City They centred on the decision by Woodford to list some of his illiquid stocks on the Guernsey stock exchange to get around rules dictating that funds like Equity Income can invest no more than 10 per cent of savers' money in

Speaking at the Treasury Select Committee, he said: 'Listing something on an exchange where trading doesn't happen, as far as I can see, doesn't actually count as liquidity.'

Video: "Top stockpicker Neil Woodford apologises for suspending fund" (The Independent)

He also told the MPs on the committee that there are flaws in European rules surrounding collective investment funds that cover the suspended Woodford fund.

Mr Bailey said the fund's authorised manager Link Fund Solutions was 'using the rules to the full' and not informing the FCA.

He said Link and Woodford Investment Management 'were not required to tell us' about certain listing and liquidity changes in the fund.

'It's a flaw in the UCITS (Undertakings for Collective Investment in Transferable Securities) rules,' he added.

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