FCA fines Henderson £1.9m for unfair treatment of retail investors

The Financial Conduct Authority has fined Henderson Investment Funds £1.9m for the unfair treatment of retail investors in two of its funds.

The financial regulator said on Wednesday that Henderson failed to treat fairly more than 4,500 retail investors in its Japan and North American funds. It said Henderson overcharged investors after failing to inform them that it was reducing the level of active management of the funds.

The FCA said Henderson informed nearly all of the institutional investors who were affected by the change and offered to manage these two funds for them without charge. However, it did not inform its retail investors of the change in investment strategy either by amending the funds' prospectus or otherwise.

This meant that for nearly five years, Henderson charged these investors the same level of fees as it had before the decision was made without providing the same level of active management.

Mark Steward, executive director of enforcement and market oversight at the FCA, said: "The FCA requires firms to treat all its customers fairly, not just some customers. In this case, retail investors paid fees for active investment management they did not receive.

"For retail clients, the Japan and North American Funds were in effect operating as 'closet trackers' as the fees charged to them were inappropriate given the diminished level of active management. The matter is aggravated by the length of time HIFL took to identify the harm being caused to the retail investors and to fix it."