Investing
Invesco Perpetual fined £18.6m for risk failings
Invesco Perpetual has been fined £18.6m by the Financial Conduct Authority (FCA) for exposing investors to greater levels of risk than they had expected in funds including Neil Woodford’s giant income portfolios.
Between May 2008 and November 2012, Invesco Perpetual did not comply with investment limits which are designed to protect consumers by limiting their exposure to risk.
The extent of these losses was £5m and prompt compensation has been paid to the funds, the FCA said.
The regulator found that Invesco Perpetual breached rules designed to limit the risks to investors on 33 occasions and that these breaches occurred across 15 of the Invesco Perpetual branded range of funds which represented more than 70 per cent of the assets under management including Woodford’s Income and High Income funds.
In addition, the FCA said the firm did not clearly inform investors or explain the associated risks of its use of derivatives which introduced leverage into the funds.
Tracey McDermott, FCA director of enforcement and financial crime, said: “As a forward looking regulator the FCA takes action where we see risks to consumers, not just after they suffer losses.
“In this case, investors of all sizes trusted Invesco Perpetual to manage their money. They signed up for a certain level of risk but we found Invesco Perpetual’s actions were at odds with investors’ reasonable expectations.”
Invesco Perpetual is the largest retail investment manager in the UK with around £47bn of assets under management, much of which is invested by retail consumers.
The FCA said Invesco Perpetual had acted quickly to improve its systems and controls and to remediate the issues.
Invesco Perpetual agreed to settle at an early stage, qualifying for a 30 per cent discount to their fine. Without this, the fine would have been £26,632,900.
Invesco Perpetual CEO Mark Armour said: “This refers to a period between May 2008 and November 2012, and the FCA has noted that Invesco Perpetual acted promptly to enhance its systems and controls.
“We are confident that our systems and controls are now strong, effective and compliant with all applicable regulations. The small number of impacted funds were fully reimbursed.
“In this instance, we clearly fell short of the high standards we consistently strive to deliver. However, we are pleased that this matter has been fully resolved with the FCA and is now closed.”
