The Financial Conduct Authority (FCA) in the UK has warned that it would impose a fine of £50m on Link Fund Solutions (LFS) over its failings leading to the collapse of LF Woodford Equity Income Fund (WEIF).
LFS, a subsidiary of Australia-based Link Group, managed WEIF that was suspended in June 2019.
The newly proposed penalty is in addition to an existing £306m redress payment announced by FCA.
It has been proposed in the form of a draft warning notice issued to Link after an investigation by the watchdog that looked into the causes behind the failure of WEIF.
A period of 14 days has been given to Link to respond.
In case no agreement is reached within the period, LFS will be able to challenge the regulator’s findings and the proposed penalty at the Regulatory Decisions Committee and Upper Tribunal.
In a statement, the FCA said: “The draft Warning Notice includes a proposed penalty of £50m, before any discounts for prompt settlement.
“In addition, the notice sets out the basis for redress payment LFS could be required to pay of up to £306m.”
In a statement to the Australian Securities Exchange, Link Group noted that it will try to settle the case with FCA and will challenge any warning notice if required.
The planned fine and redress payment have brought uncertainty over Link Group’s takeover discussions with Canada’s Dye & Durham (DND), reported Reuters.
DND has already reduced the value of the deal by a fifth to A$1.95bn ($1.3bn).