Neil Woodford’s clients could find their money frozen in his investment fund until CHRISTMAS as his company continues to receive almost £100,000 a day in fees
- Mr Woodford, 59, has refused to stop charging customers claiming fees needed
- City analysts have warned the fund could remain shut for as long as six months
- If fund isn’t opened until December, total fees could hit up to £12million
Published: 22:35 BST, 7 July 2019 | Updated: 00:23 BST, 8 July 2019
Savers may be unable to get their money back from scandal-hit fund manager Neil Woodford until Christmas – allowing his firm to pocket nearly £12million in fees.
Withdrawals from his Equity Income fund were blocked early last month because he ran out of ready cash to pay back investors wanting to leave the fund.
Now City analysts have warned that the fund could be shut for as long as six months, lasting until December.
Neil Woodford, 59, has refused to stop charging customers and is claiming that their fees cover essential costs
Mr Woodford’s management company is earning almost £100,000 every working day from his captive army of savers, meaning that the company has already been paid around £2.2million since the closure. Last week it was announced that the fund will stay shut for at least another 28 days, so fees will rise to nearly £4million. If the fund is not opened until December 3, the total fees could hit £12million.
Mr Woodford, 59, has so far refused to stop charging customers, claiming the fees cover essential costs as he tries to get the fund running again.
These bills include salaries for staff, as well as trading charges as he sells risky investments to free up money so clients can eventually be paid back when they leave.
Last night a spokesman refused to give a breakdown of exactly how the fees are spent or say what proportion will end up as profit.
If the Equity Income fund is not opened again until December 3, the total fees could hit £12million
Darius McDermott, an analyst at City firm Chelsea Financial Services, warned that it could take up to six months before Equity Income reopens because Mr Woodford’s risky bets will be so hard to unpick.
‘We do not know when the fund will reopen,’ said Mr McDermott. ‘Woodford Investment Management has indicated that it will be at least three months. We think it could be between three and six months.’
Every 28 days Link Fund Solutions, an independent company responsible for making sure the Equity Income fund follows City rules, must say whether it can be reopened.
However, there is no limit on how long the fund can remain closed for. It will stay shut until there is enough ready money available to pay savers who want to withdraw from it.
Darius McDermott, an analyst at City firm Chelsea Financial Services, warned that it could take up to six months before Equity Income reopens because Mr Woodford’s risky bets will be so hard to unpick. Pictured is Woodford Investment Management
MPs, campaigners and City watchdog the Financial Conduct Authority have piled pressure on Mr Woodford to stop charging customers but he has repeatedly refused to do so.
James Daley, of consumer group Fairer Finance, said: ‘The morally just thing to do would be to refund all the fees. He needs to start showing some humility.’
Ken Goodwin, 71, who has £56,000 trapped in the Equity Income fund with his wife Margaret, said: ‘Mr Woodford seems to have gambled with our money – well it is ours, can we have it back please?
‘I am hoping the fees he is still charging me are paying for him to sort this mess out, except he isn’t. We are using everything we have now to stay afloat. It’s such a feeling of helplessness.’
A Woodford spokesman said: ‘The annual management charge, paid to Woodford Investment Management, covers a wide range of costs associated with running an actively managed fund. This includes the fund management, infrastructure, staff, resource and administration costs.’