The Financial Conduct Authority has made clear it is "likely" to seek consumer redress of up to £306m on Link Fund Solutions over its failings in the collapse of the former Woodford Equity Income fund.
In a statement relating to a proposed takeover of Link Group, the FCA revealed the probable course of action it will take over Link Fund Solutions' "failings in managing the liquidity of the WEIF".
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The regulator said it had "investigated the circumstances leading to the suspension of the WEIF and is likely to seek to require LFS to pay a financial penalty and/or consumer redress", although it clarified this was "not a final decision" and LFS is welcome to challenge any proposed action through an independent decision maker.
This redress figure of £306m "does not reflect any amount which may be owed to anyone else, including members of the fund" and is "based on misconduct rather than losses caused by fluctuations in the market value of price of investments".
The FCA added that it was continuing to investigate matters "relevant to the operation of the fund" and that there are "multiple parties" currently under investigation.
This statement comes as a result of a takeover bid from Dye and Durham of Link Group, which includes the acquisition of seven firms authorised by the FCA, including LFS.
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The regulator has approved D&D's acquisition of LFS, subject to the condition that the group commits to "make funds available to meet any shortfall within LFS".
A further update on the result of the WEIF investigation will be provided by the FCA "as soon as it is able to do so".
Link Group has been contacted for a reply.
