Three years ago, the flagship Woodford Equity Income fund was suspended as it could not meet a surge in redemption requests following a period of poor performance.

The suspension of the £3bn fund was originally due to be lifted and the fund re-opened in December 2019. But in October 2019, the fund’s administrators confirmed the fund would be wound-up with cash returned to customers “as soon as possible”.

The first tranche of payments from the sale of assets from the renamed LF Equity Income fund came in January 2020, with a second lot in March 2020.

A third payment from the collapsed fund was made in August 2020 and investors received a fourth payment in December 2020.

Investors were expecting the return of their money by the end of 2022. However in March this year, Link Fund Solutions – the fund’s administrator – admitted that selling the fund’s assets may not be complete by the end of 2022 as it had hoped.

As the sorry saga is set to drag into 2023, investors are still owed £140m while £2.54bn has been returned. 

Ryan Hughes, AJ Bell head of investment research, said: “The suspension of the £3.5bn Woodford Equity Income fund shocked investors in June 2019. No one expected the sorry saga would still be unresolved three years later. Investors will rightly feel angry and frustrated that they still have money stuck in the fund, with £140m outstanding and no clear end in sight.

“Link have indicated that the winding up process may even run into 2023, dragging out the misery for investors. Over the past three years, investors have received four payments totalling £2.54bn. But the last of these was back in December 2020, with Link clearly struggling to offload the nine highly-illiquid companies remaining – including the well-known Atom Bank – at a sensible price.”

Hughes added there is a delicate balance between winding up the fund and getting a fair price for the remaining assets.

“After three years I suspect many investors would prefer to draw a line under this, accept a lower price and move on. However, the furore that occurred when Link sold assets to Acacia Research for £224m – some of which were then quickly sold for huge profits – will no doubt have made them wary of accusations they’ve sold assets on the cheap,” he said.

He added that the protracted affair “has highlighted the total unsuitability of illiquid assets in open-ended, daily traded funds”.

“Thankfully one of the outcomes of these events is that other managers have removed such assets from their funds. Ripple effects have also reached the open-ended commercial property fund market, which could see fundamental changes to try and balance liquidity and accessibility.

“Ultimately, the fact that this saga has dragged on for so long has been damaging for the reputation of the whole industry. No doubt we will hear the familiar words ‘lessons will be learned’ once the final review is concluded by the FCA, but I suspect that will be of little comfort to the thousands of investors impacted and it will take a long time to regain the trust of these people,” he said.