The conditional approval of a potential takeover of Link Fund Solutions (LFS) by Dye and Durham, a provider of workflow software for the professional market, has led to the FCA announcing that it may seek up to £306m ($353m) of redress from LFS in connection with the liquidation of the LF Woodford Equity Income Fund (WEIF) in October 2019. The FCA’s concern is that the financial assets available to LFS may not cover the redress payment sought by the regulator.

Although the FCA has not yet reached a determination on the appropriate outcome of its investigation of LFS, it indicates that evidence gathered as part of the investigation “is likely to demonstrate that LFS committed misconduct in the course of its management of the WEIF”. 

The Link Group has released an announcement indicating that the LFS “does not agree with the FCA’s view” and that it will explore all options available “including challenging any Warning Notice that may be issued”. Trading in Link Administration Holdings Limited (ASX: LNK) was temporarily suspended on the Australian Stock Exchange on Monday. 

It is interesting to note that the FCA specifically singles out retail consumers as those affected by the failure of the WEIF. In its Consumer Duty press release the FCA indicated that one of its key objectives was setting “higher and clearer standards of consumer protection across financial services” and that the Duty formed a part of its transformation to becoming a “more assertive” regulator. Against this backdrop it is unsurprising to see the FCA’s determined efforts to recover as much money as possible in order to compensate those who lost out as a result of the WEIF liquidation.