The Financial Conduct Authority has hit out at "self-interested criticism" of its Woodford Equity Income redress deal.
In a speech given at the City & Financial FCA Investigations and Enforcement Summit, Therese Chambers, joint executive director of enforcement and market oversight at the regulator, urged investors in the fund to "seriously consider" voting for the redress scheme.
The FCA has agreed a redress scheme with Link Fund Solutions, the fund’s authorised corporate director, which will see £235mn paid to the 300,000 investors.
This means investors will receive 77p in the pound for the amount they lost.
Chambers said: "We wish every pound could be recovered. Although the redress scheme does not cover all losses, we consider it is in the interests of investors to seriously consider it.
"The proposed scheme offers investors the best chance to obtain a better outcome than might be achieved by any other means. I notice that there has been some self-interested criticism about this, and the suggestion dangled that there could be greater financial settlements if victims join a private litigation fund. This promises an unrealistic return.
"This deal exhausts the resources of LFS. And the parent company contribution is voluntary. Link Group will also fight our findings should creditors vote against the scheme, which would further deplete funds available for redress."
The redress payment is made up of LFS's assets plus part of the proceeds from the sale of LFS (without the Woodford liability) to Dublin-based Waystone Group.
Link, LFS's parent company, has agreed to make a voluntary contribution of £60mn - an amount Chambers said would not otherwise be available to investors.
'Model behaviour'
Chambers also praised Quilter for its handling of Lighthouse’s involvement in the British Steel Pension Scheme scandal.
Quilter was “model example” of how to behave.
Last month the FCA censured Lighthouse over the unsuitable advice it gave those looking to transfer out of defined benefit pension schemes.
Quilter bought Lighthouse in June 2019 and the FCA investigation into the firm began a year later.
Chambers said the FCA decided, in a “highly unusual” move, not to fine Lighthouse due to Quilter’s handling of the incident.
“Quilter took responsibility for the unsuitable advice given – advice that had been given before it had acquired Lighthouse,” she said.
“Quilter also took responsibility for improving the inadequate control framework that they found.”
Chambers said the circumstances were “more unusual” than they should be, as the regulator often encounters firms that have to be “strong armed” into making things right, and seek to evade their responsibilities.
She said Quilter deserved credit for taking responsibility and for the proactive way in which the company and its staff worked with the regulator to put it right, making the “necessary improvements” to their systems and controls.
“Their co-operation was exemplary…a model example of how to behave,” she said.
