Lawyers representing thousands of investors trapped in the failed Woodford Fund have called for clarity on whether the Financial Services Compensation Scheme (FSCS) will step in.
Law firm Harcus Parker believes investors should be able to claim from the FSCS if they are not compensated in full by the administrator Link Fund Solutions, which was found to have failed in its duty.
The firm has written to the FSCS calling for support for investors who are likely to lose out, it said.
In the coming months, investors will be asked to vote on a Link redress scheme from the Financial Conduct Authority (FCA) which offers £235mn in compensation to investors in the fund.
However, Harcus Parker which represents 7,500 Woodford fund clients, estimates the losses suffered to be as high as £1bn.
The FCA calculated the losses for the fund to be £298mn but struck a deal after determining that Link does not have the enough money to pay the full amount.
Daniel Kerrigan, a partner at the law firm, said: “We remain committed to ensuring that all investors can recover as much of their losses as possible. Even if we were to accept the FCA’s figures that investors lost £298mn - which we don’t - then the £235mn on offer can only be regarded as a “bad deal”.
“Nearly all of our clients who invested in the fund will have lost less than the £85,000 FSCS pay-out so should be able to be fully compensated.
“‘It is vital that investors have clarity on this issue before they are asked to vote on the scheme. First, we need to understand if the FSCS is willing to compensate investors, which we say it should.”
Kerrigan added that investors have lost out through “no fault of their own” who should be protected by the FSCS’s safety net.
Harcus Parker claims investors have suffered a loss of at least 30p per share since the fund was suspended adding that nearly all of the Woodford fund clients fall below the FSCS’s £85,000 threshold, meaning they should be entitled to get all their money back.
Link was responsible for monitoring and supervising the investments executed by Neil Woodford’s eponymous fund before it failed in October 2019.
In November 2022, Link’s figures showed there was £50mn still in the fund after £2.56bn was sent to investors through five payments.
In April this year, the FCA announced that Link made ‘critical errors and mistakes’ which ‘caused significant losses for those investors who remained in the fund when it was suspended’.
The law firm wrote to the FSCS on August 16 and said it is still awaiting a reply.
The FSCS was contacted and Link declined to comment.
tara.o'connor@ft.com
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