‘I may lose £100K regardless of Woodford fund redress scheme’ | EUROtoday

People who misplaced tens of hundreds of kilos when a star stockpicker’s funding fund collapsed say they’ve been let down by the UK’s monetary regulator and are calling on MPs to analyze.

Around 300,000 folks misplaced cash when Woodford Equity Income Fund collapsed in 2019.

In 2023, the Financial Conduct Authority (FCA) introduced a “redress scheme” that it stated would permit buyers to get better round 77p within the pound.

But some buyers say that determine was deceptive, and the scheme coming into power locked them out of different client protections.

The FCA says the scheme affords the “quickest and best chance” of getting a “better outcome than might be achieved by other means”.

When Ian Duffield and his spouse Linda, from Manchester, put £234,000 of their pension financial savings into Neil Woodford’s fund, they thought most of their cash can be protected.

Mr Woodford got here with a stellar popularity, and the fund marketed that it was protected below the Financial Services Compensation Scheme (FSCS), which pays compensation when a monetary agency fails.

After its collapse, the Duffields recovered a few of their cash when the fund’s belongings had been offered off, however this nonetheless left them with a lack of about £107,000.

Ian stated when the redress scheme was introduced, they initially thought they might get most of that remaining sum again.

“When I first heard it, I thought… I’ll end up losing, maybe £30-35K between us, which is not great, but in the scheme of things it would have been OK, a bit of a sigh of relief”.

On studying the element, he realised that was not the case, because the scheme took under consideration the cash that they had already obtained.

He truly obtained £7,600, leaving him and his spouse with a complete lack of practically £100,000.

“It has affected our lives. We had to not take holidays for a few years…but we’re fortunate,” he says.

“I know people who’ve lost far lesser sums, but the impact has been much greater”.

Investors within the fund voted to just accept the scheme in December 2023, which means they’re not capable of entry the Financial Services Compensation Scheme.

Paul King from Kingston-upon-Thames works in IT and invested just below £50,000 within the Woodford fund to assist save for his retirement.

He stated he had taken consolation in the truth that it gave the impression to be protected.

“At the end of the day, I’m just a consumer. You do your best to provision for the future and you put a lot of weight behind the FSCS,” he says.

“I didn’t anticipate that if things went wrong that we would be shafted, to put it bluntly”.

“I feel I’ve got more protection if I buy a faulty pair of shoes costing £50 than if the regulator of this country fails and I lose £50,000”.

A bunch of MPs and friends, the All-Party Parliamentary Group (APPG) for Investment Fraud and Fairer Financial Services, has now written to the Commons Treasury committee to ask for them to conduct an inquiry into how the FCA dealt with the fund’s collapse, together with the way it arrange the redress scheme.

In a report back to be printed on Tuesday, the APPG will say the FCA didn’t correctly talk that its “77p in the pound” determine solely associated to among the belongings within the fund, moderately than in its entirety.

“Only a minute minority of investors were sufficiently engaged to even begin to understand the nuances and intricacies of what was taking place,” they may argue.

The Woodford Equity Income Fund collapsed in 2019 after numerous buyers withdrew their cash over issues concerning the investments being made.

The redress scheme was proposed by Link Fund Solutions (LFS), the previous authorised company director of the fund.

It got here after the FCA investigated and three investor teams filed lawsuits over the best way LFS had managed the fund.

A FCA spokesperson stated the dimensions of the redress scheme didn’t mirror funding losses because of the underperformance of the fund.

“Instead, it covers the losses that flowed from Link Fund Solutions’ conduct, which we consider fell below the required standards,” they added.

“The scheme offered investors the quickest and best chance to obtain a better outcome than might be achieved by any other means. The scheme was approved by more than 90% of investors.”

Almost 94% of buyers backed the compensation scheme in a vote in December 2023, though solely 54,000 voted. It was accredited by a High Court decide final yr.