UK FCA fines Henderson Investment Funds Limited £1,867,900


UK Financial Conduct Authority (FCA) has announced yesterday that it has fined Henderson Investment Funds Limited (HIFL) £1,867,900. The company failed to treat fairly more than 4,500 retail investors in two of its funds:

  • Henderson Japan Enhanced Equity Fund and
  • Henderson North American Enhanced Equity Fund (the Japan and North American Funds).

Back in 2011, HIFL’s appointed investment manager, Henderson Global Investors Limited (HGIL), decided to reduce the level of active management of its Japan and North American Funds.

HGIL informed the institutional investors of the change, but failed to share the change in investment strategy to any of the retail clients either by amending the funds’ prospectus or otherwise. Thus the retail clients have been charged the same level of fees as it had before the decision was made for nearly 5 years. HIFL charged investors £1,784,465.32 more than if they had invested in a passive fund.

Mark Steward

Mark Steward, FCA

Mark Steward, Executive Director of Enforcement and Market Oversight at the FCA, commented:

The FCA requires firms to treat all its customers fairly, not just some customers. In this case, retail investors paid fees for active investment management they did not receive. For retail clients, the Japan and North American Funds were in effect operating as “closet trackers” as the fees charged to them were inappropriate given the diminished level of active management. The matter is aggravated by the length of time HIFL took to identify the harm being caused to the retail investors and to fix it.

The company agreed to cooperate and to resolve this matter and qualified for a 30% discount under the FCA’s executive settlement procedures.

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