Regulator denies Jersey is “back door" after disgraced financier announces local venture

Tuesday 09 March 2021

The head of Jersey’s financial watchdog has said that a disgraced fund manager’s attempts to start a new venture in Jersey have led to the impression that the island can be used as a “back door."

Neil Woodford announced in a Sunday Telegraph interview last month that he planned to start afresh in Jersey with a new biotech-focused enterprise, just 18 months after his previous £3bn venture linked to Guernsey left 300,000 investors suffering significant losses.

The fund’s meltdown remains under investigation by the Financial Conduct Authority (FCA). In the meantime, Mr Woodford remains registered to work in the industry.

The Jersey Financial Services Commission (JFSC) expressed frustrations with Mr Woodford’s surprise reveal soon after, saying it was “disappointed” that he had done so without having submitted any of the necessary paperwork to conduct business in Jersey. 

“It would be normal practice when making such an announcement to make it clear that it is ‘subject to regulatory approval’,” a statement read.

JFSC Director General Martin Moloney (pictured top) has now ramped up the regulatory rhetoric, launching what the Financial Times described as a “blistering attack” on Mr Woodford’s plans.

Pictured: The JFSC confirmed that Mr Woodford had not received regulatory approval for his new venture, days after he announced it to the press.

In an interview published yesterday, he said publicity around the announcement had “created the very false impression that Jersey could be used as a back door to gain access to the UK market”.

“Anyone who gets off the plane thinking that Jersey is a soft touch has wasted the price of the ticket. Jersey is not the place to come if you are trying to get around UK regulation, or any other regulation for that matter,” he stressed. 

Mr Moloney also emphasised that the island has a “very close working relationship” with the FCA in the UK. The FCA’s Director of Enforcement has previously confirmed that it would “share information” with the JFSC on any application for a new firm made in either jurisdiction. 

“We would not want Jersey to be used by anyone to avoid the kind of protections, which rightly apply to investors in the UK,” Mr Moloney told the FT.

“We aim for equivalent or similar outcomes in terms of the level of protection that our regulatory regime provides, and we actively consider the impact that businesses here can have on investors in other jurisdictions.”  

Jersey’s Finance Minister has also weighed in on the matter, saying last month that he didn’t want Mr Woodford to be given the green light to set up a new business in Jersey until the FCA’s probe is complete.

“Jersey’s independent financial regulator, the Jersey Financial Services Commission, has received no application for a fund involving Mr Woodford. If such an application were received, the Commission would review it in line with its obligations to protect the integrity of Jersey in any commercial and financial matters,” Senator Ian Gorst said.

“As Minister with political responsibility for financial services, I would be dismayed if such a fund were to be authorised before the proper resolution of any outstanding regulatory matters in the UK, which Mr Woodford is subject to.”

Finance sector reform campaigner Gina Miller, who called for an independent inquiry following Mr Woodford's Telegraph interview, praised Jersey's regulator for its handling of the saga.

“Both the Guernsey and Jersey regulators are showing up our UK regulator,” she was reported as saying by Portfolio Adviser. “It’s not just their rhetoric, it is the reality of their decisive actions compared to the FCA speeding through the original authorisation of Woodford Investment Management.”  

Pictured: Campaigner Gina Miller.

While Mr Woodford has not had regulatory approval to launch an authorised investment management firm, the trading name ‘WCM Partners’ has been reserved. 

Mr Woodford pledged that Woodford Capital Management Partners, which will be run alongside Craig Newman and which he hopes will be based in both Buckingham and Jersey, will only raise money from professional investors.

In his Telegraph interview, he said the new fund will be focused on biotechnologies that will develop into “the likes of Immunocore, Kymab, Synairgen, Nanopore”.

Justifying his return to the financial scene, Mr Woodford, who revealed he had been forced to sell his £30m home, explained: “I didn’t want what happened to me in 2019 to be the epitaph of my career, I didn’t want it to be the full stop. 

“I’m not trying to rebuild an ego, I just felt I wanted to continue to do the things that I believe in. I don’t think I’m qualified to do anything else. You can imagine lots of people who have read the media about me wouldn’t want to touch me with a 10ft disinfected bargepole.”