Fund agreement

Woodford victims back £230m compensation deal

Neil Woodford
Neil Woodford: accused of straying into illiquid assets

Investors who suffered from the collapse of Neil Woodford’s principal fund have voted overwhelmingly to accept a compensation package of up to £230 million.

An estimated 300,000 private and institutional investors lost heavily in 2019 when the once-popular Woodford Equity Income Fund was suspended following a wave of redemption requests and was later liquidated.

The fund’s administrator Link Fund Solutions (LFS) yesterday said the scheme of redress was backed buy 93.7% of investors by number and 96.1% by value.

Although it still has to be approved by the courts, it means the victims will no longer be able to sue LFS for a potentially larger payout.

The Financial Conduct Authority, which pulled the package together, said it was the quickest and most certain way of delivering some redress to investors.

The Woodford fund got into difficulties when its eponymous creator switched into illiquid, hard-to-sell assets. The FCA found failings at LFS, which was responsible for governance of the fund.

LFS now hopes to distribute between £183.5m and £200m of the promised payout in the first quarter of 2024, assuming the court approves the arrangement after a hearing on 18 January.

“With this vote, investors have demonstrated their strong support for the scheme. We actively sought to reach as many scheme creditors as possible to ensure they had their say and are extremely grateful to all investors who made their voices heard,” LFS said.

Ryan Hughes, interim AJ Bell Investments managing director, said: “The overwhelming endorsement for the scheme of arrangement by embattled investors in the former Woodford Equity Income fund will come as a relief for many who will now be able to see an end in sight for this ongoing saga.

“Over four and a half years have passed since the fund suspended and with well over 90% of investors voting in favour of the scheme, there will be many who have done so simply because they are fed up with how long this process has taken.

“While there will no doubt be some that feel that this scheme doesn’t compensate them sufficiently for their losses, others will feel that getting back around 80% of the fund value on suspension will be more than they could have hoped for when the fund initially suspended.”

The litigation specialist RGL Group said it was pressing ahead with a lawsuit against Hargreaves Lansdown, the investment platform which recommended clients buy the fund right up to the date of its suspension.

James Hayward, CEO, RGL Management, said: “Following the result of the vote today, we strongly urge any investors who invested in the WEIF via Hargreaves Lansdown to join the RGL Group action, which is already filed in the High Court.

“Now that claims against Link will likely not be possible, the RGL Group’s claim against Hargreaves Lansdown is the only route for investors to claim the full redress they are owed.

“Any investors who invested in the WEIF via Hargreaves Lansdown, even if they were previously signed up to a competitor action against Link, are eligible to join. Joining the claim is free and no fees will be deducted until success. The RGL Group book continues to grow daily. 

“We believe that Hargreaves Lansdown should be held accountable for its conduct in relation to the WEIF and RGL and our legal team will pursue these claims tirelessly to recover all of the losses suffered by investors.”

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