You’ll probably never have heard of Link Asset Services, the body meant to keep the Woodford Equity Income Fund’s behaviour in line.
Unless, that is, you were a victim of two of the largest financial scandals of recent memory — Connaught and Arch Cru. For it was there that the firm — then known as Capita Asset Services — was chastised by City watchdogs for snoring at the wheel.
At both it performed the same role as it does at Woodford, “authorised corporate director”. Funny thing, an ACD. Despite being there to represent investors, it is appointed, and paid for, by the fund manager itself. In Woodford’s case, around 1% of fee income.
It appears Link was not exactly OCD about its role as an ACD. When Woodford’s illiquid assets breached the 10% limit, Link allowed it. When Woodford did the Guernsey trick, Link allowed it. When Woodford marketed the fund as “equity income” even after selling income stocks to pay for redemptions, Link allowed it. When it became clear investors may have been better served without having Neil Woodford at the helm, Link did not eject him.
Link runs similar services for many funds; you could say the odd blow-up is inevitable. And it says: “We have at all times acted to protect the interest of investors... The fund stayed within its regulatory requirements and the liquidity profile… has been monitored at all times.”
After Connaught and Arch Cru, Capita Asset Services got berated for doing too little to protect investors. Capita sold it to Link of Australia and it changed its name, but chief executive Chris Addenbrooke remains in charge.
One wonders if Link, or the regulators, really learned enough.
