FCA week in review April 8 – 12, 2024

A tough summation of failings in the Link Fund Solutions case, new investment research proposals, cost of living and motor finance feature in our roundup.

In its summation of findings against Link Fund Solutions, the FCA said fund manager Neil Woodford had “a defective and unreasonably narrow understanding of his responsibilities for managing liquidity risks”. The regulator’s case is that “Link Fund Solutions (LFS) failed to act with due skill, care and diligence in its management of the Woodford Equity Income Fund (WEIF)”.

A warning notice statement also alleges that Woodford and WIM “failed to ensure that the WEIF’s liquidity risk framework was appropriate, to respond appropriately to the ongoing deterioration in the fund’s liquidity, and to maintain a reasonable liquidity profile for the WEIF”.

Woodford and WIM have the right to make representations to the Regulatory Decisions Committee. Link issued a statement saying “As we have previously stated, LFSL entered into a conditional settlement agreement with the FCA and Link Group expressly on the basis that there is no admission of liability”.

A £230m ($287m) redress scheme has begun to pay out to those affected.

Therese Chambers, joint executive director of enforcement and market oversight, said: “Link Fund Solutions’ job was to properly manage the Woodford Equity Income Fund and to protect investors’ interests. Their failings led to losses for those trapped in the fund when it was suspended.

“It is right that they compensate investors for the losses that resulted from their failings, and we’re pleased that the scheme has started making payments.”

Rules and consultations

The regulator set out proposals for a new way to pay for investment research. It said “current options available to UK asset managers can be operationally complex and may, in some instances, favour larger asset managers”.

The idea is to allow payments for third-party research and trade execution to be bundled.

Sarah Pritchard, Executive Director, Markets and International, at the FCA said: “We are proposing to provide more options on how to pay for such research, helping boost competition and making it easier to buy research across borders.”

Tom Callaby and Ash Saluja from CMS provided us with some analysis.


A new cost of living survey carried out by the FCA has found 7.4 million people in the UK are still struggling to pay bills and credit repayments. That is a drop from 10.9 million a year ago, but still higher than the 5.8 million figure from February 2020, before the cost of living squeeze began.

The survey gathered information from 3,540 adults in the UK who had previously completed the FCA’s main Financial Lives survey in May 2022. Most of the responses were given in January 2024.

The FCA’s focus on the UK motor insurance market continued with letters to motor finance firms remind them that they “must maintain adequate financial resources at all times”.

The regulator said: “We are currently reviewing the historical use of motor finance discretionary commission arrangements (DCA). We have observed firms taking different approaches to account for the potential impact of previous use of DCA on their financial resources.”

The review of the motor finance market is proceeding with many firms engaging constructively, an FCA statement said. However, “many firms are struggling to promptly provide the data we need. Reasons for this include data being stored on multiple systems and / or being spread between lenders and brokers. In some older cases, firms have not retained all relevant records.”

Firms were reminded that providing certainty to consumers is reliant on comprehensive data being provided.