Investors trapped in Neil Woodford’s main fund, which collapsed last year, have expressed their dismay that the former star stock-picker and his business partner, Craig Newman, took home £13.8m in dividends from their investment management company last year.
“It’s absolutely despicable but not a surprise,” said IT Consultant Ian Flaherty, awaiting the outcome of the administration process to see how much of his £10,000 savings held in the fund has been lost.
Last month the administrators winding up the fund told 300,000 investors they had lost nearly a fifth of their money and that selling the remaining assets was proving more difficult than expected.
Flaherty said: “I think he should make a contribution to the repayment that goes to people and certainly the dividend that he paid himself from performance of his own company. Quite frankly, I would like to see him in a court of law.”
That view was echoed by Craig Orrell, a structural engineer from Greater Manchester, who called the fund’s collapse “sickening”. Orrell believed Woodford “should return the dividend to the fund, or at least give something back”.
For Peter, a 29-year-old software engineer from Scotland, Woodford and Newman’s dividends represented “a pretty disgusting amount of money”.
“Everyone needs to get paid, but taking money out when he knew things were turning sour, morally he must have questioned whether that was right,” he said.
Woodford’s flagship fund, once worth more than £10bn, fell below £3bn as investors rushed to withdraw their money after a series of poorly performing stock picks, including the online estate agent Purplebricks and the doorstep lender Provident Financial.
Woodford has faced a barrage of criticism for continuing to charge management fees after the suspension in June, but was unrepentant. In the full-year accounts issued on Tuesday, the company blamed press coverage for the fund’s demise as well as Woodford’s poor stock-picking.
A Woodford spokesperson said: “The accounts relate to the financial year before the equity income fund was suspended. We can confirm that the partners did not take any profits or income during the fund’s suspension, nor was any management fee earned from managing Woodford Patient Capital Trust.”
Orrell is critical of the role played by financial adviser Hargreaves Lansdown in promoting Woodford’s funds. He and all of the other investors who spoke to the Guardian bought into Woodford’s fund via the firm, which featured it on their “best buy” list. Hargreaves Lansdown is now facing legal actions from disgruntled investors.
Flaherty and Orrell said they wanted to see greater regulation of investment schemes, but accept that Woodford’s fees were made clear at the start of their investment. The remit of the Financial Conduct Authority, the City regulator, does not include setting profit levels for firms.
The FCA said: “We have clearly set out the actions we have taken in relation to Woodford in detailed correspondence to the Treasury select committee and have nothing further to add at this stage. We continue to investigate the activities that led to the suspension of the Woodford equity income fund.”
Linda Gorton, an NHS administrator from Bristol in her late 50s, said she had persuaded her husband to put their monthly savings into Woodford’s fund, as a way to add to their pension pots. The couple fear they have lost most of the £2,500 held in the fund, which represents two years of savings, and the experience has left her feeling “pretty hacked off”.
She does not believe Woodford will repay the dividends to investors left out of pocket, even if she would like to see it.
“Once he has got that money it is his, it’s not like they can claw it back,” Gorton said. “It would be really nice if he did something for charity, or did something good with his life, instead of just making money. That would sweeten the pill.”
