Of all the many cluster bombs left behind when Andrew Bailey left the Financial Conduct Authority (FCA) for the Bank of England a year ago, the most dangerous was the closure of Neil Woodford’s investment empire.
The decision left up to 500,000 savers exposed to an estimated half-a-billion pounds of losses.
It is aggravating and disturbing that 20 months have passed since trading was halted in Woodford’s Equity Income Fund, and still no official report into the imbroglio has seen the light of day. Woodford, so far as we know, is still an authorised person and feels able to start all over again.
Of all the many cluster bombs left behind when Andrew Bailey left the FCA for the Bank of England a year ago, the most dangerous was the closure of Neil Woodford’s investment empire
Allowing the FCA to investigate itself was a huge mistake. The Government should have used the powers it has under Section 82 of the 2012 Financial Service Act to launch a judicial inquiry.
Dame Elizabeth Gloster’s rigorous report into the failure of London Capital & Finance was done and dusted in 18 months.
In the corporate world, Alison Levitt QC’s devastating report into working practice and governance at Boohoo was completed in a remarkable three months.
Going back into history, the Singapore and UK reports into the collapse of Barings, one of the UK’s most venerated banks, were completed in a year.
The slug-like progress is bad enough, but so is the failure of the FCA to explain. New chief executive Nikhil Rathi offered no comment at his first public appearance in December 2020.
At the very least, there should be an update on progress or an interim report. Trust in the UK’s savings culture depends on it.
Lengthy delay is unacceptable and particularly unhelpful as a mountain of litigation against authorised corporate director Link and investment platform Hargreaves Lansdown piles up.
The prevarication inevitably will lead to suspicion among Woodford savers of some kind of whitewash.
Or even worse, the report is being buried by endless Maxwellisation of the kind which has held up the one into management failings at collapsed bank HBOS for nearly a decade.
Shelving publication is damaging, not just for the FCA, but also for Bailey, who was on the burning deck when the fire ignited.
A release to the stock exchange on the refinancing of pubs group Mitchells & Butlers requires more than a little decoding.
The rescue vehicle, Odyzean, brings together three investors: Piedmont, Elpida and Smoothfield, all hiding their light under a bushel.
A decade ago, these investors were at war. Veteran trader Joe Lewis – owner of Spurs – sought to keep horse-racing moguls JP McManus and John Magnier at arm’s length, along with other super-loaded members of the Sandy Lane, Barbados set, Michael Tabor and Derrick Smith.
Still, in the hour of need the three groups have come together to support a £350million fund-raising, which will leave them owning 55 per cent of the stock. Where this leaves the minority shareholders is anybody’s guess.
Lewis and his co-investors are seeking to tighten their grip by dumping a team sheet of independent directors built up to keep previously warring factions apart. Pubs and the beerage, along with most hospitality, are listing badly as a result of the coronavirus pandemic.
So it may be just as well that traditional owners have allowed in outside investors. Suffolk-based Greene King was sold in 2019 to CK Asset, a vehicle controlled by Hong Kong’s richest entrepreneur, Li Ka-shing, who also owns the UK’s biggest container port Felixstowe as well as water companies.
London brewer Fuller, Smith and Turner sold the famous Griffin Brewery to Japanese booze firm Asahi but hung onto the pubs.
The call from Tim Martin of Wetherspoons for early reopening to save an industry ‘on its knees’ indicates the degree of hurt. Ownership of much of the industry by rich outsiders may not be so bad after all.
All the critical decisions have been made now. But if ever there was a moment when Vodafone, as a leading FTSE 100 company, wanted to demonstrate its fealty to the City and the institutions which backed its growth over the last couple of decades, it was now.
Instead, it is opting to float its Vantage Towers enterprise – including its recently added UK network – in Frankfurt.
Can you imagine Siemens, RWE or any other major German business opting to do the splits in London?
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