The UK Financial Conduct Authority (FCA) was made aware of concerns about Neil Woodford's investment strategy at his fund management business back in 2015, but did not act until nearly two years later, according to reports.
The Financial Times has reported that the regulator was informed about the running of Woodford Investment Management (WIM) when Nick Hamilton and Gray Smith, two of WIM's founding partners, left the business within its first year.
Hamilton, who had been chief operating officer at Woodford's business, and Smith, chief legal and compliance officer, were interviewed by the FCA in January 2015 to explain their reasons for exiting but no further action was taken, according to "those familiar with the regulator's dealings with the company".
Where we receive information relating to concerns about firms or individuals we follow up and take action where appropriate."
Hamilton and Smith were said to be particularly concerned with the level of investment in unlisted companies by the fund manager.
The FT revealed that other former employees of WIM confirmed that the four founders disagreed about the compliance culture at the firm and the level of due diligence being carried out on Woodford's investments in private companies.
When asked by the FT about the exit interviews conducted at the time, the FCA said: "Where we receive information relating to concerns about firms or individuals we follow up and take action where appropriate. But we do not conduct our supervision of firms or individuals in public."
It followed an interview given by Woodford in which he announced his return to fund management.
Committee chair Mel Stride said: "As the FCA's investigation still continues over 18 months after the fund was suspended, the reports of the new fund may understandably be of concern to investors who previously lost out."
The FCA has said that it will provide a further update on 31 May.
Andrew Bailey, who headed up the regulator from 2016 to 2020, has previously told parliament that the FCA stepped in at WIM towards the end of 2016, at which point the firm was running around £10bn of investors' money.