Invesco Perpetual has been fined £18.6m by the City regulator for exposing clients to too much risk, including those who invested with its former star fund manager Neil Woodford.
The Financial Conduct Authority said that between May 2008 and November 2012 Invesco, which has £71bn under its control, breached investment guidelines and exposed customers to £1bn of derivatives without properly spelling out the risks to them.
The mishaps led to losses of £5m across three of its funds including the Invesco Perpetual High Income Fund and Income Fund, which were under Mr Woodford’s control until recently. He left the company in March after more after a quarter of a century to set up a new venture with Oakley Capital.
Mark Armour, the chief executive of Invesco Perpetual, said that all the losses made in the funds were reimbursed by the company. “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,” he added.
According to the FCA final notice, Invesco broke its rules on 33 separate occasions. These included over-exposing investors to individual companies and failing to record trades on the same day they were made.
The company agreed to settle early with the FCA. Had they not, the penalty would have been £26.6m.
Tracey McDermott, the FCA’s director of enforcement, said: “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.”