(mis)Conduct, Money & Reputation

Podcast Series by Lansons and Katten. Welcome to your monthly dissection of misconduct in financial services, from the rules and regulations - to the reputational fallout when things go wrong. This podcast series is an essential listen for those in asset management (and more broadly financial services) who are responsible for the safeguarding of business and brand; from compliance and corporate affairs to comms and marketing.

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Episode Background

E01: Odey, Woodford & the FCA

Reputation in financial services is complex, shaped by audience perception and regulatory scrutiny. In this episode, Neil Robson and David Masters dive into the scandals surrounding Crispin Odey and Neil Woodford, exploring how they have not only damaged their personal standings but also raised fundamental questions about trust in the system. 

While Odey’s primary audience - high-net-worth individuals and institutional investors - may have already distanced themselves, Woodford faces a different challenge, hoping to rebuild credibility with retail investors. But is redemption even possible?

And beyond the individuals, the regulator itself is under fire. The FCA has faced increasing criticism, with concerns over its handling of non-financial misconduct and its true priorities. Reports from the APPG on Fairer Financial Services and leadership departures at the CMA and FOS add to the uncertainty. Is the FCA truly serving consumers, or is its focus elsewhere? And can trust in financial services ever fully recover?

Episode Transcript

Podcast Narrator: This is misconduct, Money and Reputation, a podcast by reputation specialists Lansing's and law firm Katten.

David Masters: Hello and welcome to the episode. This is our first episode in our second season for those working in financial services, particularly in and around asset and wealth management, where we look at those tricky areas where regulation and reputation intersect. My name is David Masters, Director and Asset Management Lead at Reputation Consultancy Lansons Team Farner.

Neil Robson: And I'm Neil Robson, Regulatory Compliance Partner at law firm Katten.

David Masters: So, before we get started, I just like to make a big thank you to those who of you who stuck with us through series one. And welcome back again as we look to navigate a path through some of the more complex issues around regulation and reputation. So, to kick off this brand-new series, we are going back to where we started the first one. Well, almost! When we kicked off the first season, we started with the reported scandal at Odey Asset Management. At the time, the subject of a visceral exposé in the FT with many allegations of sexual misconduct on behalf of the proprietor. Neil, why don't you pick up the story for us and tell us what has happened since?

Neil Robson: Well, it's been a bit of a roller coaster in some ways, if you've been following the story in the media. So just to recap, way back 18 months ago, a little bit before, the Financial Times exposé had interviewed and had testimonies from 13 separate women who alleged improper conduct from, Crispin Odey, who was the obviously the named proprietor of Odey Asset Management, someone who'd been in the industry for decades, perceived as a sort of a stalwart of the asset management sector. But these various women had alleged, abuse, harassment, including eight that allegedly he sexually assaulted them. Now those were acts that took place between 1998 and 2021, when the FT did their publication, they subsequently came across another 30 plus women who alleged similar misconduct.

It's been quite telling over the years that Mr. Odey seems to have been a teflon in the sense that people have thrown mud in the past, but it's never really stuck. So, there was a case actually where he was in court back in 2021, and he defended himself in court, against a sexual assault claim from a female banker. He won that case. The judge didn't think that he had any, misconduct issues in his private life or in his professional life. But it's interesting that, similar accusations then exploded in the FT scandal. The exposé, they published, the business subsequently went into a downhill spiral, as we know. And it's been deregulated by the FCA.

Obviously, many of the funds have been transferred away, and it's essentially now a family office for Mr. Odey’s money. What's bizarre in many ways is that we still haven't seen a final notice from the FCA declaring that he is not fit and proper. In fact, it was back in December 2023, where the FCA said they were no longer investigating Odey Asset Management itself, but that they would still be investigating Mr. Odey for fitness and propriety issues. But nothing has come of that yet. And on top of all of that, Mr. Odey is suing the Financial Times for 79 million pounds given his reputational damage.

David Masters: It's an interesting one when we think about the reputational impact, because obviously, as we talked about when we first, covered this, there were a lot of people who stopped dealing or doing business with the Odey Asset Management.

Neil Robson: Because they didn't want to be tainted by being associated with somebody that was in the public eye for improper conduct and therefore themselves could have a bad reputation as a result.

David Masters: Yeah. And obviously, coming back as an unregulated entity, as a family office, which is effectively what he has done, is a way of circumventing that. You can take the man out of investing, but you can't take the investing out of the man.

Neil Robson: Yeah. And, of course, it's worth flagging. You don't have to be FCA authorised to manage your own money or your family's money. A family office for one family has an exemption from any requirement to be FCA authorized.

David Masters: But obviously, if he was to try and manage money for other people, that would no longer be the case.

Neil Robson: Absolutely. And he would need to have a finding from the FCA that he is fit and proper to be able to do that. So, we still wait to see that from the FCA. And as we mentioned in the episode, one of the last series, the Odey scandal blew up with the FCA coming out with its non-financial misconduct rules, which have been widely accepted by the industry as being a good approach to regulating the conduct of individuals outside the workplace, where it does impact on their ability to do their job, their honesty, their integrity, their reputation. And yet, we still haven't seen those final rules either. There's a lot of question marks as to, you know, where's this all coming? Back in December last year, 2024. The FCA said that they would be forthcoming in 2025. But when?

David Masters: Well, yes. Absolutely. The family office thing, I think the other thing is, is for a lot of people who have been watching this, it wasn't necessarily a big surprise. I think now how true these stories were that were circulating beforehand. I don't know, but certainly in the run up to this scandal, there were stories that primarily the money that Crispin Odey was managing was family and friends’ money, so to speak. So, the idea that it's come back as a family offices is not a surprise. If on that basis, assuming an element of truth in those stories.

Neil Robson: Indeed, and we have to say of course, that these are accusations, they're allegations, there's not been any criminal finding against Mr. Odey at this point in time. But I think, as I said in episode one, is it a case that there's no smoke without fire? Obviously, the justice system needs to go through their process to find out whether that's the case or not. But given that, out podcast series is (Mis)conduct, Money and Reputation. I think it's fair to say that his reputation is in tatters.

David Masters: Yeah, I absolutely and I think there's an interesting parallel we can draw here with another sort of fund manager who's fallen from grace. And that would be Neil Woodford. Now, I'm not for one moment suggesting that there is any similarity between what Mr. Woodford was accused of and what Mr. Odey was accused of. Also, there are slightly different beasts as well. But when we think about reputation, it's important to think about who the audience is.

Neil Robson: Absolutely.

David Masters: Because different audiences respond differently to different issues. They perceive things differently. And that's one of the reasons why it's very hard to quantify reputation in any sort of individual metric. So, with Odey Asset Management, obviously the audience there is going to be family offices, high net worth individuals, and maybe some quasi-institutional investors as well. Because this is where he built his name. He built his reputation, in the first instance.

Neil Robson: Crispin O'Dea was around for decades, and he made a lot of people a huge amount of money by being very successful for a very long period of time.

David Masters: Yeah, and Neil Woodford, very similar, but much more of a retail or mass affluent audience because, he was the hero of Middle England or I think he has suddenly recently said something that he sort of disagrees that that was ever the case, but he certainly was held in high esteem. He was covered in the personal finance press. His performance was excellent for a lengthy period of time. And what you have in those situations is there is always some form of residual goodwill out there because, somebody did something, got something, got a great reward off the back of putting their money with some with Woodford.

Neil Robson: I mean, I think if we look back, Neil Woodford was very successful. He made his name at Invesco Perpetual. He had a huge success there as a Portfolio Manager. He went his own way, set up Woodford Investment Management was similarly successful. People put their pensions into the Woodford, UK Equity Income Fund, big slice of their pensions with a view to there being a successful return. At its peak it had 10 billion pounds of people's money in it. But then there were some disastrous investments, of course, and has been very publicly, discussed over the last couple of years, massive outflows. As soon as they started going downhill, the big pension funds came out, big institutions came out. The people to come out last were Mom and Pop and Mrs. at number 43.

David Masters: Yeah. And there are a whole number of issues around this. I think after he announced he was leaving Invesco - Invesco were then fined by the FCA because, Woodford had effectively, made some investments that fell outside of the mandate of the vehicle. So, he’d over invested in unlisted and illiquid securities, which funnily enough, was what was repeated at Woodford's own firm.

Neil Robson: Indeed.

David Masters: But Woodford brings us on another circular journey, which is where we ended last season, which was talking about Finfluencers, and that is how he has reinvented himself, giving opinions on the markets. Now, that for him, because he is that much more retail figure and much more celebrated on that basis. So, you know, redemption for him is a challenge.

Neil Robson: Yeah. Although, it's quite interesting for me, having looked at his blog, which is called, ‘Woodford Views’, a lot of what he says is very, very sensible. It's very measured. It's very reasonable. There’re people out there reading this stuff. His opinion still matters to a lot of people.

David Masters: But as a Finfluencer, you make your money primarily through working with well-known brands, and you can't see too many well-known investment brands wanting to be associated.

Neil Robson: This is very true. To go back to that comment, you made earlier about being the saviour of Middle England, there was an article, I think it was in the Telegraph. But he said, “I am neither Hero nor Villain. I was never the financial saviour of Middle England, but then neither do I think I was worthy of the onslaught followed the failure of my business.” So, he's staking his claim. He's saying it wasn't all me. It wasn't all my fault. But I guess it’s the same platform, isn't it?

David Masters: Yeah, but I guess the question is. And this is again, when we think about reputation and how you rebuild a reputation, there must be some admission of culpability for people to move on. And until there is an admission of culpability, it is very difficult for your audience to really move on and accept you in a new light.

Neil Robson: His name was on the fund; his name was on the asset manager. This is his fund. The media and the public perceive that he was the guy at the front of it all. He headed it all up.

David Masters: Yeah, but what is the other connecting point between what we're talking about in terms of Woodford and Odey really is the behaviour of the regulator.

Neil Robson: Oh, absolutely.

David Masters: And how well/not well, the regulator has performed. And I know recently that, the All-party Parliamentary Group for Fairer Financial Services has issued two reports now being quite critical of the regulator, to which the regulator has not really responded. Now, before we go any further, I must make a transparency declaration here. A disclosure, because the Transparency Taskforce, of which I am on the advisory board and, am an ambassador for is the secretariat of the APPG. And therefore, I do have a little bit of knowledge of this report and how it was put together, etc. But Neil, do you want to just give us a quick rundown of what have been the key events over the last couple of months with this?

Neil Robson: Yeah. So, what I'll comment on are just the purely public elements of it. So, the All-parties Parliamentary Group report was published in December last year, December 2024. And it can only really be described as hard hitting. It slams the FCA on every account. The report, which was made up of, as the name suggests, all parties across the House of Lords and the House of Commons. So, a broad but a slice of the whole of Parliament looking at the FCA and the FCA’s own conduct. Bearing in mind, that the FCA, the Financial Conduct Authority, is supposed to be regulating the conduct of financial services firms in the UK.

So, looking at the FCA's own conduct, the APPG report said that the FCA was, and I quote here, “incompetent at best, dishonest at worst”. The APPG, the parliamentary group, had interviewed 175 victims of fraud, whistleblowers and former FCA staff, which led to this report being written. So, this was a long process. Several years, 358 pages, this report and at every single count, they say the FCA is failing. Their own conduct is inadequate, macho and aggressive. That there's a culture within the FCA of basically people climbing up the corporate ladder and trying to do the right thing for themselves without really, truly taking the best interests of the market, consumers, regulated firms into account.

David Masters: It's interesting, isn't it, because I think the ultimate upshot of it really, is that if the FCA was held to account by its the standards of the organisations that it regulates, it would fail on pretty much every count.

Neil Robson: Yeah, the APPG report proposes overhauling the FCA and its management because of their aggressive, macho attitude and the fact that they don't seem to have the interests of those downstream from them at heart. And that really does ring true to me as a regulatory lawyer working with financial institutions seeking either FCA authorisation or changes to their FCA license, their authorisation. We've seen over the last couple of years just some bizarre attitudes, aggressive, misunderstood approaches to the firms that seeking guidance from the FCA or authorisation and sometimes just being plain aggressive and not really understanding, the firm that they're seeking to get authorised. That's quite scary.

David Masters: And obviously, they didn't really respond to the first report that was issued last year. So, at the beginning of February, the APPG issued a supplementary report or the first instalment of a supplementary report. Because, as I said, the FCA hadn't responded to its request to meet with them. It had failed to meaningfully challenge any of the claims or allegations made in the reports by 174 people who gave testimony.

The FCA response to widespread media coverage about the original report was that the report dealt with historic issues, that had been remedied already through its transformation program and through disclosures achieved through a Freedom of Information request. It had been discovered that the FCA is claiming that 85% of FCA stakeholders agree the FCA achieves its objective of protecting consumers. But there's not really a lot of evidence. I don't think that anybody has been able to find to support that.

Neil Robson: No. And if I give you one key example, something that I've experienced personally, again, we've had a number of clients who've made whistleblowing disclosures to the FCA regarding serious breaches of the FCA rules, and they have just disappeared into the ether. The FCA have acknowledged receipt but then appear to have done absolutely nothing. The individuals in question who had complained about, who on paper, I would say are committing criminal offenses. The FCA has done nothing. They're still at those regulated firms. And this is despite, two years ago, the FCA part of this transformation program, bringing out its new whistleblowing campaign to disclose in confidence but with confidence.

That was their tagline. And I have no confidence because we've had clients who've whistle blown and nothing has happened. Now, if the FCA claim that 85% of stakeholders think they're doing, you know, achieving their own objectives, is it just on the consumer point because that was a comment you made earlier, are they only protecting consumers and not doing anything else? What's going on at the FCA?

David Masters: Yeah. Well, that's a very good question. I was rather hoping you could answer that one. But it is interesting, thinking about it from a reputation perspective, if we go back to what I said earlier, if we're going to think about reputation, we have to look at the audiences. I think the thing that's become very, very clear, looking at how the FCA has responded or not responded to this report, you would have to argue that their primary audience, the only audience they're really interested in, is the Treasury. 

So, if you think about all their stakeholder groups, if you think about the consumers are designed to protect, they're not really in regular, communication with consumers anyway. In many respects it's a subliminal communication, isn't it? The idea that the FCA is, upholding the rights of consumers and therefore consumers should have confidence to use the financial services interests of the UK. And if we're going to go on a growth trajectory as the UK government wants, then we need to have confidence in the financial services.

Neil Robson: Yeah. And of course, it's worth bearing in mind. One of the suggestions if the All-Party Parliamentary Group report is that ultimately, if the FCA can't adjust its own internal management style, if they can't change the way they operate, then frankly, they should be broken up or new regulatory groups put in place, which perhaps takes us back 25 years.

Back before the days of the Financial Services Markets Act in 2000, where we had a myriad of different regulators each of which were answerable to government only. Now, I don't think that's the direction of travel here. And certainly, given this weekend's letter published quite widely across the financial services media. Letter from Nikhil Rathi, CEO of the FCA, addressed to the Prime Minister, where if you read it, it feels very defensive. This is what we've done. This is what we've done. Now, again, in context, Nikhil Rathi’s contract expires in September. His five years as FCA’s CEO will be up. That letter reads like he's trying to drum up business for another five-year contract.

David Masters: And that course would make him the only head of the FCA to do two terms effects.

Neil Robson: Absolutely. Now, again, quite tellingly, if I use that phrase, we understand from the Media Times published an article just the other day, saying that he has lost out on the UK's most senior civil servant role, which would have been chair of the Cabinet Office secretary.

David Masters: So, it is an interesting one that this was a Gill Treeman’s piece published in the Sunday Times over the weekend. And it does indeed appear that the publication of the letter to Keir Starmer, which was dated the 16th of January this year, then came out. So, it was sort of in response to that. But I suppose it's an interesting challenge, because we have a new government. So, we have Rachel Reeves, who's the new chancellor.

Neil Robson: Growth, growth, growth.

David Masters: Absolutely.

Neil Robson: Got to have growth.

David Masters: But one suspects that if we weren't in a situation where growth was so anaemic and hard to find, that if the government had more time that they probably would be seeking, as the APPG, suggest reconstructing the regulatory framework for financial markets in this country. I suspect, as you said earlier, that they're probably not planning to take it back to, the early days of Lautro and all sorts.

Neil Robson: Imro and all the other regulators that we used to have.

David Masters: Well, some of us are old enough to remember those, but I'm sure that many of our listeners aren't. So, we should probably move forward. But it is an interesting challenge. And obviously again, we've lost the head of the CMA, recently departed, I think the Head of the FOS.

Neil Robson: The Ombudsman Service.

David Masters: But I think it is challenging that we are faced with a government that is looking for growth, that needs financial services to be a very significant part of that, in terms of capital allocation, in terms of job creation, etc. But also, we can't afford to fund the retirement of a growing aging population.

So, we need more and more people to take control of their own finances. So, the government is sort of caught between a rock and a hard place - that it needs growth, but it also needs a framework which promotes that growth. And I think that is the problem that the government has with the regulator at the moment. But the problem the regulator has is that it's just not doing a good enough job on any level.

Neil Robson: No, it's not really following its own rules properly. And the consumer duty protecting consumer at all costs has been hammered home by Nikhil Rathi and the FCA over the last five years. That's something in his letter that to the Prime Minister that he sort of lauds as his primary achievement. Yet nonetheless, we see that that's not the be all and end all. If the government's supposed to be creating growth, if the FCA is supposed to be putting in regulations that allow growth, why have they not achieved half the things that the last conservative government put forward with the Edinburgh reforms? They've fallen by the wayside, cutting back from EU rules that we've baked into British rules, post-Brexit, why haven't they been removed yet? The proposals are there, they're ready to be implemented, but they haven't happened. The consumer duty has become the overriding focus of the current FCA management.

David Masters: But obviously we've now had the consumer duty requirement for consumer duty champion being removed.

Neil Robson: It’s a mixed message.

David Masters: It throws into question this whole consumer protection. And we've talked a little bit about the Transparency Taskforce, the TTF. As an ambassador, I shouldn't go on about it too much. But if you can just let me with one last little thing, the TTF exists because of continuing challenges and issues in the financial services sector, particularly around the issue of consumer protection.

It exists because of Woodford and the Woodford scandal, that is really where the TTF was formed by a very brilliant gentleman called Andy Agathangelou. And there is case, after case, after case, far too numerous for me to mention. Number of issues of regulatory failure around financial services in this country. So, I have to challenge that 85% of people think we are doing a good job of protecting consumers because, unless you are saying that the work they are doing is protecting consumers from even worse, then it's difficult to imagine really how they can be as successful as they are.

Neil Robson: Yeah, it's hard to see them as a success at the FCA currently, when you bear in mind that the Crispin Odey scandal, the amount of evidence that appears to be building against him and there's still no decision notice, no final notice from the FCA in terms of is he fit and proper or not? You know, even under the old rules, I think it's quite difficult from my perspective as a lawyer to say that he's fit and proper.

He's got honesty and integrity. When you look at some of the other cases the FCA have pushed through and enforced against over the years, you know, gentleman who's effectively dodging the ticket barrier, he had lacked honesty and integrity. How is it not that there's a case against Odey at this point in time? And as with Woodford, again, there's no final notice. There's no final determination from the FCA on whether he's fit and proper. So, both stalwarts of the financial community over the decades, that they're in limbo because the FCA hasn't made a decision yet, which you find curious, I have to say.

David Masters: So maybe just one last thought to end on, if the model we have, Twin Peaks, the regulatory framework that we have in this country isn't working all the better models around the world that we could be leaning into, whether that's the US or Australia, are there better ways of doing this?

Neil Robson: I think that's a really difficult question to answer. The SEC in the US is a political football. So, for example, in the US at the moment, they're not going to do any enforcement under the Foreign & Corrupt Practices Act of 1977.

David Masters: This is about bribery in foreign offices.

Neil Robson: This is about bribery. They're not enforcing any bribery cases because that's anti-competitive for US businesses. We can't have a regulator that is a political animal, surely. They must do a job to protect the public, to protect the markets, to regulate the firms that operate, of which there's 50,000 in the UK. The FCA has got an enormous job, there’s no doubt about the fact that they have a difficult job to do, but what is the next option if we don't have the FCA, do we go back to the FSA, where effectively we'd merge the PRA back into the FCA?

That was broken up by the Tories, because it was a Labour sort of creation way back when. I don't know what the answer is, because surely, on paper, enforcing the rules that we have, overseeing everything properly without a political agenda should be the right answer. But how do you put that in place when the previous chief executive of the FCA and FSA before it, have gone on to other bigger and better political roles. Bank of England Governor, for example?

David Masters: Yeah, and he was a tremendous success as an FCA Chief, wasn't he?

Neil Robson: Oh, absolutely. But FCA was just a stepping stone.

David Masters: And that's another concern isn't it. Because as you've mentioned earlier in the weekend press, we had this story about the current Chairman, was he really looking for another role? So, we have career regulators and whatever our regulator is called, whether it's FCA, FSA, whatever. An awful lot of the people working for the same people. But what's important here is what comes from the top, the management, the structure and the framework under which it operates as well. So great, I'm afraid that is all we have time for today. We'll be back next time where we will be exploring other real-world cases where reputation and regulation intersect in the world of asset and wealth management. I'm David Masters.

Neil Robson: And I'm Neil Robson.

David Masters: Thank you very much for listening.

Neil Robson: Thank you

Podcast Narrator: You've been listening to (mis)Conduct, Money and Reputation. Please do stay tuned for further episodes by subscribing on your favourite podcast app. You can find us by searching Lansons or Katten. This episode was recorded in the Lansons studios and brought to you by reputation specialists Lansons and law firm Katten. 

The content in this podcast is for informational purposes only. It does not constitute legal advice and is not intended to establish an attorney client relationship, nor is it intended to suggest standards of care applicable to attorneys in any given situation. This podcast is considered attorney advertising. Prior results do not guarantee a similar outcome. Any views, opinions or comments made by external guest speakers are not to be attributed to Katten Muchin Rosenman LLP, and or Katten Muchin Rosenman UK LLP, or their individual attorneys’ lawyers.

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Disclaimer: The content in this podcast is for informational purposes only. It does not constitute legal advice and is not intended to establish an attorney-client relationship, nor is it intended to suggest standards of care applicable to attorneys in any given situation. This podcast is considered attorney advertising. Prior results do not guarantee a similar outcome. Any views, opinions or comments made by external guest speakers - are not to be attributed to Katten Muchin Rosenman LLP and/or Katten Muchin Rosenman UK LLP or their individual attorneys/lawyers. All rights reserved.