NorthWest Biotherapeutics Inc (NWBO)

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More Woodford Indiscretions revealed along with COZY relations with Hargreaves affecting 292K clients

ALEX BRUMMER:

Hargreaves' breach of trust

The reality check for a company chairman comes at times of crisis. That moment has arrived for Deanna Oppenheimer, who joined Hargreaves Lansdown in February 2018.

This was three months after Hargreaves discovered that Woodford Equity Income fund had increased the proportion of small and unquoted assets in its holdings.

Hargreaves might have been expected to intensify engagement with Woodford on a continuous basis and remove Equity Income from its recommended ‘Wealth 50’ list without delay.

This might seem like hindsight except when one recognises that some 25 per cent of Hargreaves’ clients, or a stunning 291,520 people, are exposed to Woodford funds.

Quite frankly, with such huge exposures, the alarm bells should have been ringing right up to board level.

The belief that Woodford could trade himself out of his problems was a bit like a losing gambler upping the stakes on the last race.

Oppenheimer has experience with savers, as former president for consumer banking at Washington Mutual. She left in 2005, three years before it crashed in the financial crisis.

From there she moved to Barclays and sampled the crunch, and departed in 2011 just before the Libor affair erupted.

The challenges for Oppenheimer are considerable. The reputation of Hargreaves has been trashed by its closeness to Woodford.

Share sales by senior executives including the head of research Mark Dampier, just weeks before Equity Income had to close its doors for 28 days, looked terrible even if they breached no regulations. It created the impression of a cosy club more caring of their own wealth than clients.[t][/t]

Hargreaves has sought to lance the boil with apologies from chief executive Chris Hill, who indicated that he will forgo bonuses.

That is noble but Oppenheimer and the chairman of the pay committee Fiona Clutterbuck should be clear that there should be no bonuses for executives and senior managers until, at the least, investors in Woodford are back in the money.

Indeed, Hargreaves, having suspended its management fee, should consider compensation to those out of pocket and unable to wait for Woodford’s outsiders to romp home.

Focus today will be on Financial Conduct Authority (FCA) chief executive Andrew Bailey’s session before the Treasury Select Committee.

Why was the FCA slow to act when it had early information a year ago of fund illiquidity? How was it possible for Equity Income to ship holdings off to related Patient Capital Trust without someone crying foul?

And how was Woodford able to list unquoted stocks in Guernsey without anyone seeing this as a sleight of hand?

At the heart of all that went wrong at Hargreaves and Woodford was a cosy, trusting

, culture which needs fixing immediately. Saying sorry is not enough.

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