Compensations Scheme of £230 Million Approved for Neil Woodford Investors

Campaigners argue that this calculation overlooks broader losses.

A High Court judge has given the green light to a £230 million compensation scheme aimed at providing redress to investors ensnared by the collapse of a fund managed by renowned stock picker Neil Woodford.

The Woodford Equity Income Fund froze in 2019, leaving approximately 300,000 investors facing losses. Nearly 94% of investors supported the proposed redress scheme in a December vote, although only 54,000 cast their votes.

However, campaigners have criticized the court’s decision, deeming it an “appalling outcome,” and are contemplating an appeal.

Neil Woodford, once a prominent figure in the UK’s investment world, garnered considerable attention when he launched his own managed fund.

The fund, which managed over £10 billion at its peak, was frozen in June 2019 and subsequently wound up.

However, concerns mounted among investors regarding the fund’s investment choices, leading to a significant withdrawal of funds.

The proposed redress scheme was put forth by Link Fund Solutions (LFS), the former authorised corporate director of the fund, following an investigation by the Financial Conduct Authority (FCA) and legal action initiated by three investor groups over LFS’s management of the fund.

High Court Judge Jonathan Richards, in a ruling published on Friday, upheld the overwhelming support for the scheme among investors, paving the way for an initial payout of £183.5 million in the current quarter.

The FCA, endorsing the scheme, estimated that investors could recoup approximately 77p for every pound invested. However, campaigners argue that this calculation overlooks broader losses.

The Transparency Task Force, advocating for Woodford investors, condemned the scheme as offering a dismal outcome, with many facing unintended repercussions.

Founder Andy Agathangelou asserted that most investors stand to recover only a fraction of their capital losses, with no compensation for missed returns over the past four and a half years.

The group is contemplating an appeal against the court’s approval, citing concerns about the removal of legal safeguards for individuals.

Ryan Hughes from investment platform AJ Bell acknowledged that investors may feel some relief, although the possibility of an appeal means the resolution of the saga remains uncertain. He emphasized the significance of each step forward in bringing closure to the protracted ordeal.

Nate O'Hara
Nathan is a seasoned commerce writer with a passion for unraveling the intricacies of the business world and distilling them into engaging narratives. During his academic journey, he delved deep into subjects like economics, marketing, and entrepreneurship, honing his analytical skills and developing a keen understanding of market dynamics.