Neil Woodford will make nearly £2million in management fees from savers who cannot get access to their next nest eggs during the first four weeks that his flagship fund is shut.
The once-feted fund manager was under mounting pressure last night to hand back the ‘disgraceful’ fees.
Despite banning savers from withdrawing their cash from his Equity Income fund, Mr Woodford is still taking raking in around £93,000 per working day in management fees.
Neil Woodford will make nearly £2million in management fees from savers who cannot get access to their next nest eggs during the first four weeks that his flagship fund is shut
It means his firm, Woodford Investment Management, stands to make nearly £2million during the first 28 days his fund remains ‘gated’. But there is speculation that it will stay shut until Christmas, a period over which he would earn about £14million.
Critics have urged Mr Woodford, 59, who has made more than £60million from his investment business in just four years, to hand back the cash while the freeze stays in place.
But the father-of-two has refused to back down, reportedly arguing that the charges will stay in place because he is still managing funds on his customers’ behalf.
James Daley, founder of campaign group Fairer Finance, said: ‘Neil Woodford needs to show some compassion for his clients. By all accounts, he was getting paid incredibly well and he has made a lot of money over the years.
John Mann (above), a Treasury Committee member, said: ‘It’s a total disgrace that Neil Woodford continues to charge savers hundreds of thousands of pounds in management fees when they are unable to access their money'
‘If he wants any chance of rebuilding his reputation, he needs to show some contrition and humility – and one easy way to do that would be to waive these fees while the freeze on withdrawals continues.’
MPs on Parliamentary committees have said they will examine the affair. John Mann, a Treasury Committee member, said: ‘It’s a total disgrace that Neil Woodford continues to charge savers hundreds of thousands of pounds in management fees when they are unable to access their money. He should waive them immediately.’
Mr Woodford, once considered a star fund manager, has made a fortune, buying luxurious homes in Devon and the Cotswolds
Mr Woodford, once considered a star fund manager, has made a fortune, buying luxurious homes in Devon and the Cotswolds.
He set up his own investment fund in 2014 and since then has extracted about £63million in dividends and shared profits from the businesses, although some of this was given to charity or reinvested.
The crisis at his empire erupted after hundreds of millions of pounds was pulled from its Woodford Equity Income fund in a matter of weeks, after several bad bets on shares.
He took the drastic step of banning further withdrawals last Monday, after Kent County Council tried to pull about £263million of pension money from the fund.
But Mr Woodford, who told savers he was ‘extremely sorry’ for the move, has continued to charge management fees to savers who were blocked from getting their cash for at least 28 days. A spokesman said his fees remained ‘unchanged’.
Hargreaves Lansdown, the investment platform through which £1.1billion of savers’ money was put into Mr Woodford’s main fund, has also called on him to cut fees. It has waived its own charges for customers with money in the fund while the freeze continues.
Facing difficult questions, the wealthy pal who backed him as disaster loomed
One of Neil Woodford’s biggest champions was last night facing questions about his close relationship with the embattled fund manager.
Mark Dampier, 62, made millions promoting his friend’s investments.
He and his 63-year-old wife Annette have enjoyed a lifestyle of luxury thanks to his position as top financial adviser at Hargreaves Lansdown – an investment platform through which £1.1billion of savers’ cash was put into Mr Woodford’s main fund.
Mark Dampier (pictured left) has been one of Neil Woodford’s (right) biggest champions
The two men have known each other for 25 years, with Mr Dampier helping to promote his friend’s interests with personal interviews posted online.
But on Monday Mr Woodford told customers of his flagship Equity Income fund that they cannot take their cash out for at least 28 days. As disaster loomed, Mr Dampier stood by his pal.
He waited until the fund was frozen to take it out of Hargreaves Lansdown’s ‘Wealth 50’ list of fancied funds, a crucial tool for their 1.1million customers to decide where to park their money.
Just weeks ago Mr Dampier told clients: ‘This isn’t the first time in his career Neil Woodford’s under-performed. We think he’s still got the skill to deliver excellent long term performance.’
Yesterday Hargreaves Lansdown boss Chris Hill issued a grovelling apology to clients. In a message, he said: ‘We all share their disappointment and frustration. Our priority right now is to support our clients and keep them informed.
He and his 63-year-old wife Annette have enjoyed a lifestyle of luxury thanks to his position as top financial adviser at Hargreaves Lansdown
‘The shortcomings of one fund should not detract from the benefits of favourite fund lists like the Wealth 50.’
Mr Dampier’s support
