The decision follows announcements by Link Group to the Australian Securities Exchange and D&D to the Toronto Stock Exchange on D&D’s proposed takeover of Link Group. Shares in the Australian-listed Link Group plummeted 20% today over the new obstacle to the $2.5 billion (£2.1bn) buyout  

As the proposed takeover involves the acquisition of seven firms authorised by the FCA, D&D is required to seek FCA approval to take control of these firms. One of these is Link Fund Solutions Ltd (LFS), which managed the LF Woodford Equity Income Fund (WEIF) - a former fund, run by now-disgraced investor Neil Woodford, which managed £3bn from retail investors when it collapsed in 2019 dealing heavy financial losses to its over 300,000 retail clients.

The FCA has investigated the circumstances leading to the suspension of the WEIF and is likely to seek to require LFS to pay a financial penalty and/or consumer redress. However, this is not a final decision – LFS can challenge any proposed action at the Regulatory Decisions Committee, the FCA’s independent decision maker in contested disciplinary cases, and, then through the Upper Tribunal if LFS chooses to exercise its right to do so.

The FCA’s current view is that the redress payment LFS could be required to pay may be up to £306 million. This redress proposal reflects the FCA’s current view of LFS’s failings in managing the liquidity of the WEIF. It does not reflect any amount which may be owed to anyone else, including members of the fund, as a result of potential wrongdoing by other parties. The FCA is continuing to investigate matters relevant to the operation of the fund. FCA-determined redress is based on misconduct rather than losses caused by fluctuations in the market value or price of investments.

Subject to the condition to commit to make adequate funds available to meet any shortfall within LFS for redress payments LFS may be required to make, the FCA approves D&D’s acquisition of LFS. This is the only condition the FCA has decided to impose to allow D&D to take control of the seven UK-authorised firms. The FCA has approved a change in control for the other six UK-regulated entities owned by Link Group.

Given the FCA’s enforcement case with LFS is ongoing, the FCA is not currently able to provide any further information. The FCA understands that investors will be keen to understand the impact that this may have on them, including any potential to receive redress, and will provide an update as soon as it is able to do so.