Investor Event

WOODFORD UPDATE 12

Recent announcements relating to Woodford Equity Income Fund (WEIF) warrant close attention:

The FCA is effectively urging investors to approve the scheme and is stating that legal redress claims promise an unrealistic return since FSCS compensation would not cover investment losses. This statement is confusing, since redress claims are claims for damages, not for investment losses.

The regulator underlines that its scheme will result in a 77% recovery for WEIF investors versus the NAV held at the point of the fund’s suspension in 2019. It fails to point out that 71% of that recovery has been from asset sales, and that the scheme will cover just 6% more, which represents less than a quarter of the £1 billion lost by investors since the suspension.

There appears to be a fundamental conflict between the FCA’s role in protecting consumers and its apparent desire to avoid creating a claim on the FSCS, which would ultimately be borne by the financial services industry via the FSCS levy.

One positive note is that the regulator continues to investigate other parties to this mess, suggesting that there may be further action to come from the FCA in due course.

What is clear is that the FCA scheme is problematic for the legal redress schemes. Some of these are effectively focused only on the LFS action, while others have a second or third string to their bow, such as Hargreaves Lansdown and possibly even Northern Trust.

The law firms are taking stock, and Leigh Day has now closed its claim to new applicants. Accordingly, our endorsement of that claim is no longer relevant and has been withdrawn.

At this stage, it is prudent for affected investors to await further information from the FCA.

3 Comments
  1. Gillian Costello says:

    This update says that Sharesoc is withdrawing it’s endorsement of the Leigh Day claim…..why is it no longer relevant for Sharesoc to endorse the claim?
    And where does this leave us as claimants and victims of this Woodford saga with regard to the Leigh Day claim if the FCA successfully and satisfactorily puts this compensation scheme in place??
    I now actively discourage anyone I know personally from putting their hard earned money into any stock market investments. Just by disclosing my own scandalous experiences with every single financial product linked to the stock market I was ever persuaded to buy over the past 35years, it’s enough of a deterrent and the FCA, if it were a responsible body should be doing the same.
    The pension market of the past 35 plus years has been totally unfit for the ordinary working person, the governments and financial services industry knew that at the time but just stood by, no, actively endorsed it and let the financially uneducated (including me) hand over their often paltry income in exchange for huge fees, empty promises and no guarantees……AND IT’S STILL GOING ON!!!
    Regards,
    Gillian Costello

  2. Amit Vedhara says:

    Gillian
    I can only respond to the part of your comment relating to Leigh Day.

    ShareSoc has withdrawn its endorsement from Leigh Day simply because they closed their claim to new claimants back in March. At the time we endorsed their claim it was the best no win no fee legal claim and had what we believed was a strong case. As the update above explains there have been unexpected developments and the FCA proposals make it likely that pursuing Link for redress for new claimants would potentially be inadvisable.

    ShareSoc is committed to improving investment education as we are aware of the risks that investing entails and launched both Investor Academy and last year the Investing Basics video series.

  3. Cliff Weight says:

    Dear Gillian, the Endorsement was about which was the best claim to join, which we evaluated in Nov 2020. So as it is no longer possible to join the Leigh Day claim, that endorsement is no longer applicable.

    It is worth pointing out that since 1926, investments in the S&P have increased by an average of 10.1% p.a. which is far in excess of cash. Those who are financially uneducated are right to be cautious of promises of guaranteed high returns. However I urge such people to educate themselves about investing. ShareSoc Investing Basics is a good place to start with ten simple 10-minute videos. http://www.InvestingBasics.org. Honest Money Now is a good website for those wanting to start from scratch. see http://www.honestmoneynow.co.uk ShareSoc Investor Academy is also a very good source of independent information.

    One of the many problems with Woodford is that those giving advice to invest in Woodford were incentivised to do so and did not give independent advice.

    The FCA and the Treasury are working hard to explain that cash investments for many people are not the best way to invest and that many people should be investing in the stock market. I urge you and those you have given advice to rethink and adopt a more nuanced approach.

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