FCA urges Woodford to 'very seriously' consider dropping fees

The head of the Financial Conduct Authority has called on Woodford Investment Management to consider suspending fees on its gated flagship fund.

The firm, founded by star stock-picker Neil Woodford, took the unusual step of suspending its Woodford Equity Income Fund last week after a run of redemptions. It did not say how long the suspension would last, only that it would use the time to reduce the fund’s exposure to illiquid and unquoted stocks.

But Nicky Morgan, the chair of the Treasury Select Committee, has called on the fund manager to drop management fees associated with the fund, telling the BBC Radio 4 Today programme: "i think it’s something like £100,000 per day potentially in fees. I mean that is a huge amount of money. It would be a gesture, certainly, for Mr Woodford not to have those fees."

And on Tuesday, Andrew Bailey backed Morgan. The regulator's chief executive, also speaking on Today, said: "I agree with what Nicky Morgan said, which is I think he should consider very seriously his position.

"However, from our point of view, we need him to manage these assets now more than ever, because his job now is to get this fund back into a position where there can be orderly trading."

Morgan has also written to the FCA, asking it to publish details of contact with Woodford Investment Management and confirm if a formal investigation was planned.

Hargreaves Lansdown, the financial advisor, has dropped its platform fees for clients who are affected by the suspension, noting that it was unfair to charge customers when they were prevented from trading.

Woodford Investment Management was not immediately available for comment.