The Financial Conduct Authority has urged Neil Woodford’s burnt investors to “seriously consider the offer on the table” after it struck a redress deal with the fund’s administrator earlier this year.
The City watchdog announced in April that Woodford’s former fund manager Link Fund Solutions had agreed to repay £235m to investors whose cash was trapped in the fund when it imploded in 2019 amid a liquidity crunch.
A payout for investors currently hinges on the successful sale of Link Group’s Fund Solutions business by Aussie parent firm Link Group.
In a speech today, the regulator’s new enforcement chief called on investors to consider the deal and not be led astray by “self-interested” and “unrealistic” offers of recovering more cash by joining litigation funds.
“Creditors for Woodford Equity Income Fund should seriously consider the offer on the table – this is the quickest and best chance to obtain redress,” said Therese Chambers, joint executive director of enforcement and market oversight at the FCA.
“Although the redress scheme does not cover all losses, we consider it is in the interests of investors to seriously consider it,” she added.
Chambers said the proposed scheme “offers investors the best chance to obtain a better outcome than might be achieved by any other means” by recovering some 77p in the pound of the lost funds.
The deal has the potential to bring a close to the long saga for Woodford investors, who lost hundreds of millions when the fund collapsed amid a flood of withdrawals.
The former star stockpicker had punted investors’ cash on unlisted private stock, triggering fears of a liquidity crunch and rush on the fund.
Link Fund Solutions was found to have made “critical mistakes and errors” in managing the fund’s liquidity.