LONDON (Reuters) – British politicians and regulators piled pressure on Neil Woodford following the suspension of his flagship fund a week ago, while investors pulled money from his other products and a major backer distanced itself from the frozen fund.

Woodford Investment Management suspended its equity income fund on June 3, a rare move for a product aimed at retail equity investors, after a run of redemption requests.

Nicky Morgan, a senior British lawmaker, on Monday called for greater action from the regulator over the suspension, citing “a significant concern about its impact on investors, as well as the wider regulation and supervision of funds.”

Morgan’s comments came after Andrew Bailey, chief executive of Britain’s markets regulator, the Financial Conduct Authority, said the suspension raised “important questions” about how illiquid investments should be regulated.

Woodford, one of Britain’s best known fund managers, last week cut stakes in more than 20 companies to free up cash. His fall from grace featured prominently in British newspapers over the weekend.

Fund supermarket Hargreaves Lansdown, whose customers accounted for more than 30% of the fund at the end of last year, said it was “considering the Woodford Equity Income fund’s contribution carefully” in its multi-manager funds.

Morningstar data showed assets under management at the frozen fund, which still provides daily pricing data based on underlying market movements, fell 4% to 3.55 billion pounds ($4.50 billion) on June 6 from May 31.

Investors do not know when it will reopen, and the freezing of the assets has led to a war of words between regulators in Britain and offshore dependency Guernsey, where some of its assets are listed.

VOTING WITH THEIR FEET

With the main fund suspended, investors have voted with their feet in withdrawing from Woodford’s other two funds.

Woodford Patient Capital Trust’s shares fell around 20% last week after the equity income fund was suspended. WPCT sought to reassure investors on Monday, saying it was pleased with the progress of its portfolio companies.

Despite that, shares in the fund slid further and were down 5.7% by 1430 GMT, near their record low and the biggest faller on Britain’s FTSE mid-cap index.

The unlisted Woodford Income Focus fund fell 14% between May 31 and June 6 to 425.2 million pounds, according to Morningstar.

Morgan, chairman of the influential Treasury Committee which oversee all finance-related issues, asked the FCA to detail its supervisory contact with Woodford, whether it planned to investigate the suspension and how long the suspension should last for.

LEARNING LESSONS

The FCA was already looking at toughening up rules for funds and is due to announce final changes later this year.

“We will take into account the lessons of the Woodford fund when finalizing these rules,” Bailey said in the Financial Times.

Bailey said that investment platforms also have responsibilities when it comes to recommending “best buys”.

Hargreaves Lansdown picks out a number of funds it considers to be among the best value for its ‘Wealth 50’ list.

Many retail investors would likely have chosen to invest in Woodford’s fund in part because of the support of Hargreaves.

To try and stem the tide of bad publicity, Hargreaves Chief Executive Chris Hill apologized personally to clients in a statement on the firm’s website, but defended the “benefits” of favorite fund lists like the Wealth 50.

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