A law firm is calling for investors trapped in the failed Woodford Equity Income fund to have special voting rights on a proposed redress scheme.
Link Fund Solutions Limited, the administrator of the fund once run by Neil Woodford, was due to appear in the High Court on Tuesday (October 10) to establish a framework for the scheme but the hearing was adjourned until tomorrow.
Under the proposals, investors would receive a share in up to £230mn in compensation. A further £5mn was not included in the settlement fund to pay Link's costs of implementing the scheme and other wind down costs.
This is less than the £298mn the FCA said it would order Link to pay in the absence of a deal.
But lawyers from Harcus Parker, which represents 7,500 claimants, and Leigh Day, which represents 12,500 claimants, argued that a special voting class for individual investors, not represented by financial institutions, should be created.
Daniel Kerrigan, a partner at Harcus Parker, said: “We are fighting to preserve our clients’ chance to claim fair compensation, which is a much higher percentage of the money that they lost through no fault of their own than is on offer in the scheme.
“We are determined to get the best outcome for our clients and not let them be railroaded into the bad deal that the FCA has helped to carve out.”
He went on to say that it would mean clients could vote against the deal and take their case to the Financial Services Compensation Scheme, adding that almost all of clients’ individual losses fall below the £85,000 FSCS threshold.
Kerrigan added: "We are asking the courts to recognise that individual investors should not be left powerless by block voting which in turn will prevent them from claiming full compensation from the FSCS."
Link was expected to ask court to approve its proposed scheme on the condition that 50 per cent would have to vote in favour and represent at least 75 per cent of the value of shares voted.
Harcus Parker said the true figure for the compensation they believe is due is more than £1bn.
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’.
Link and the FCA were contacted for comment.
tara.o'connor@ft.com
What's your view?
Have your say in the comments section below or email us: ftadviser.newsdesk@ft.com.
