The City watchdog vowed to review ‘Best Buy’ lists from platforms like Hargreaves Lansdown on Tuesday after questions over their commercial ties to the shuttered Woodford fund.
The FTSE 100 company also saw its shares fall a further 1.5% today after Morgan Stanley analysts said the heightened regulatory scrutiny and damage to its brand would hit the share price.
Financial Conduct Authority chief Andrew Bailey, under pressure to help clean up the Woodford fallout, said the regulator will review whether fund supermarkets are complying with principles that recommendations should be impartial.
The regulator backed the lists in March as a means to help savers choose funds, but they have come under fire due to the financial incentives of firms to promote some funds.
Hargreaves earned an estimated £450,000 per month from Woodford’s shuttered income fund, according to Numis, and it remained on its list of 50 best funds up until the moment it was closed to redemptions.
“We look at how funds construct these best buy tables, and the principles. They should be impartial, they should do it thoroughly and they should make sure it’s done promptly in the sense of being up to date,” Bailey told the BBC.
“We will look at these again to ensure they and others have abided by those principles.”
Bailey, who said Woodford had around 20% of his fund in illiquid assets, said the fallen fund star should consider waiving his fees of around £100,000 a day.
He got around a 10% cap on illiquid stocks by listing some of them in Guernsey, helping classify them as “overseas” investments.
He added Woodford “has his work cut again” to salvage his frozen fund for savers.
