Following our announcement of redress as part of our enforcement case against Link Fund Solutions (LFS), we explain what this means if you invested in the Woodford Equity Income Fund (WEIF).
LFS, with the support of its ultimate parent, Link Administration Holdings (Link Group), have proposed a scheme[1] which, if approved, will see them pay redress to those who were invested in the WEIF at the time of its suspension in June 2019.
We found that failures by LFS in managing the liquidity of the fund meant that those who didn’t redeem their investments before it was suspended, were unfairly disadvantaged.
The final redress figures will be based on investors voting to approve the scheme. If it is approved, we expect it to provide up to approximately £235 million in compensation for those who lost money.
We think this proposal both maximises the available redress and is the fastest way for it to be paid.
The Scheme of Arrangement
This is a process used by a company to reach a binding agreement with its creditors to pay back all, or part, of the money it owes them over an agreed timeline.
This means that those who are owed money must agree to the proposed scheme. If the scheme is not approved, consumers won’t receive redress at this point. We will continue our enforcement action against LFS. However, this may take several years to resolve and even if successful, this means redress would be limited to LFS’s remaining assets – so would likely be less than is available under the scheme.
Next steps
We understand that you will want to know more about how this may impact you as an investor, and we are continuing to work with LFS on the details of the scheme. Subject to the progress of completion of the sale of Link’s Fund Solutions business, we currently expect to provide an update in July 2023, with scheme documentation becoming available as early as possible in the fourth quarter of 2023. We will continue to update on progress.
Our investigations into other parties connected to the suspension of the fund continue and we will consider any further failings which may have negatively impacted investors. We understand this is frustrating, but we can’t provide any further details due to confidentiality while the cases are ongoing.