The letter is the first formal legal step in legal action on behalf of more than 4,000 investors in the Woodford Equity Income Fund against Link which was the authorised corporate director in charge of the fund.

The letter alleges that Link mismanaged the fund, and in particular it failed to maintain appropriate levels of liquid assets for a fund of this kind.

The letter demonstrates that the failure of the Woodford Equity Income Fund was not an event that occurred out of the blue and could have been avoided if Link had done its job properly.

Link now has three months to respond to the letter.

If, in response to this letter, Link does not agree to compensate investors, Leigh Day will issue court proceedings in the High Court on behalf of its clients.

This could lead to a trial in which the various parties involved with the Woodford fund could be called to give evidence. Leigh Day has instructed Derrick Dale QC of Fountain Court and Teniola Onabanjo of 3VB as counsel on this matter.

Leigh Day has secured adequate ‘after the event’ insurance and litigation funding in order to be able to take the claim through to a trial. The firm is therefore in a position to issue court proceedings, without its clients facing a risk of having to personally meet Link’s costs.

Boz Michalowska, on behalf of Leigh Day, said: “The thousands of people who invested in this fund were entitled to expect that their money was in safe hands and managed within the FCA rules. Sadly, this was not the case. Link failed to do their job and take the necessary steps to protect the interests of those that had invested in the WEIF. As a result, our clients have lost hard earned savings and pensions.

“The LBA is the first formal step on behalf of 4,000 of our clients to recover those losses and hold those responsible to account.”

The Woodford Equity Income fund was suspended in June 2019 following an increase in redemption requests which couldn’t be readily met. In October 2019, Link confirmed the £3bn fund would be wound-up with cash returned to investors as soon as possible.

ShareSoc, a not-for-profit UK individual shareholder society, has endorsed the action proposed by Leigh Day.

Mark Northway, ShareSoc chairman, said: “It’s fantastic news that another critical milestone has been hit in Leigh Day’s legal claim against Link. We are delighted for Woodford WEIF investors and gratified that we have endorsed this claim.

“ShareSoc reviewed the various potential claims and concluded that the Leigh Day claim is well-managed and is structured to maximise financial returns to investors. The Leigh Day claim is also a key plank of the ShareSoc Woodford Campaign to improve regulation and hold wrongdoers to account.”