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Watchdog fines Invesco £18.6m for rule breaks
Published 12/05/14



INVESCO Perpetual has been fined £18.6 million by the Government’s finance regulator.

The Financial Conduct Authority says the asset management firm, which is based in Henley, broke rules designed to limit the risk to investors.

It says the company breached the regulations on 33 occasions across 15 funds over a four-year period from 2008 to 2012.

This represented more than 70 per cent of the funds under its management and created losses of £5million, which Invesco has paid back.

Funds are not supposed to invest more than five per cent of their total value in any one company but Invesco exceeded this limit.


The FCA says Invesco compensated investors promptly but the losses could have been greater. It says the company also failed to inform investors clearly that it used derivatives and to explain the risks associated with this.

Additionally, one in 11 trades in its bond funds were not recorded promptly enough, putting them at risk of being wrongly valued.

Tracey McDermott, the authority’s director of enforcement, said the company’s actions were “at odds with investors’ reasonable expectations”.

In a statement, Invesco said the errors were “historic issues” that had been “fully rectified”.

It said the risks associated with derivatives were outlined in the full prospectuses but not in the simplified versions and summary documents. Chief executive Mark Armour said: “We are confident that our systems and controls are now strong, effective and compliant with 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.”

The penalty was the fourth largest fine relating to retail financial products to be issued. It was reduced by 30 per cent from £26.6million because Invesco agreed to settle early.

Two of the three funds which were compensated were managed by Neil Woodford, who left the company last month after 25 years to start his own venture.

Wealth management firm St James’ Place, which acts on behalf of 200,000 small investors, has switched £3.65 billion out of Invesco to follow him.

Three members of Invesco’s investment team have also left to work for his company, which is called Woodford Investment Management.

They are fund manager Stephen Lamacraft and analysts Paul Lamacraft and Saku Saha.

Published 12/05/14

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