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Woodford investors set for £230m refund after High Court ruling

Woodford investors set for £230m refund after High Court ruling
Matt Browning
Written By:
Matt Browning

A High Court has approved the long-awaited redress scheme to pay back the investors trapped in the fund fronted by Neil Woodford.

Around 300,000 investors who lost their money in the Woodford Equity Income Fund (WEIF) (now LF Equity Income Fund) will receive a total of £230m.

High-profile fund manager Neil Woodford had his flagship funds frozen in October 2019 after a flurry of redemption requests were not met after a spell of poor performance.

The £3.6bn investment pot was wound up and investors were assured by administrators that reimbursement would happen “as soon as possible”. So far, £2.56bn has been distributed to former investors.

It potentially marks the end of a long road to agreeing on a compensation scheme, which involved a Financial Conduct Authority (FCA) investigation and three lawsuits surrounding how Link Fund Solutions (LFS) managed the fund.

But after almost four years since the investment collapsed, Justice Richards ruled an initial £183.5m payment will finally be paid to investors in March.

Compensation overwhelmingly agreed but appeals could follow

In December 2023, over 54,000 creditors voted to decide on the redress arrangement – proposed by LFS – and 93.7% opted in favour of the scheme, with just 6.3% going against it.

Ryan Hughes, managing director at investment platform AJ Bell, said: “Investors will be breathing a sigh of relief following the news that the judge has approved the Woodford redress scheme.

“The review had dragged on longer than anticipated due to some complex legal arguments heard at the court hearing in mid-January, but this clears a major hurdle for investors to move closer to getting their redress payments.”

However, the payment (initially £183.5m) depends on any appeals, which may yet add further delays. Some campaigners, including the Transparency Task Force (TTF), feel the 80% redress of the fund value on suspension does not represent the full amount of creditors’ losses.

‘Creditors have been cast aside’

Members believe that approving the compensation will also remove the possibility of legal action and pursuing further funds through the Financial Services Compensation.

Andy Agathangelou, TTF founder, said: “Woodford investors who relied on the FCA’s claims, and media reporting of them, backed the Scheme by a large majority. Many will have wrongly believed they’d be getting 77p back for each Pound outstanding.

“But the reality is that most won’t achieve even a tenth of that. And as for the Parliament-given rights of consumers, which the FCA has an explicit, statutory remit to protect, they seem to have been cast aside, as if Parliament had never intended them.”

Any appeals of the ruling have until 24 February to oppose the decision.