Helen Catt
Political correspondent
Ian Duffield
Ian Duffield and his wife Linda invested £ 234,000 with their retirement savings in the Neil Woodford Fund
People who have lost tens of thousands of pounds when the investment fund of a Star Stockpicker collapsed said that they were abandoned by the financial regulator of the United Kingdom and call on the deputies to investigate.
About 300,000 people lost money when Woodford Equity Fund collapsed in 2019.
In 2023, the Financial Conduct Authority (FCA) announced a “repair program” which, according to him, would allow investors to recover around 77p in the pound.
But some investors say that this figure was misleading, and the program entering into force locked them from other consumer protections.
The FCA claims that the program offers the “faster and best chances” to obtain a “better result than what could be achieved by other means”.
When Ian Duffield and his wife Linda, of Manchester, invested £ 234,000 with their retirement savings in the fund of Neil Woodford, they thought that most of their money would be protected.
Woodford came with a stellar reputation, and the fund announced that it had been protected by the financial services remuneration scheme (FSCS), which pays for remuneration when a financial company fails.
After his collapse, the Duffields recovered part of their money when the assets of the fund was sold, but that has always left them a loss of around £ 107,000.
Ian said that when the repair program was announced, they initially thought they would get the most of this remaining sum.
“When I heard it for the first time, I thought … I will eventually lose, maybe 30 to 35,000 £ between us, which is not great, but in the scheme of things, it would have been ok, a little sigh of relief.”
By reading the details, he realized that this was not the case, because the regime took into account the money they had already received.
In fact, he obtained £ 7,600, leaving him as well as his wife with a total loss of almost £ 100,000.
“It affected our lives. We had to take a vacation for a few years … But we are lucky,” he said.
“I know people who have lost much lower sums, but the impact was much larger.”
‘Shafted’
The fund’s investors voted to accept the scheme in December 2023, which means that they are no longer able to access the financial services remuneration regime.
Paul King of Kingston-Upon-Thames works there and has invested just under £ 50,000 in the Woodford fund to help save for retirement.
He said he had comforted himself because he seemed to be protected.
“In the end, I am only a consumer. You do your best to provision for the future and you put a lot of weight behind the FSC,” he said.
“I did not expect that if things were going wrong, we would be saying, to say it frankly.”
“I think I have more protection if I buy a defective pair of shoes costing £ 50 than if the regulator of this country fails and that I lose £ 50,000”.
“Shades and subtleties”
A group of deputies and peers, the versatile parliamentary group (APPG) of more equitable investment fraud and financial services, has now written to the Commmons Treasury Committee to ask them to investigate how the FCA managed the collapse of the fund, including the way in which it has set up the recovery program.
In a report that will be published on Tuesday, the APPG will say that the FCA has failed to communicate correctly that its figure “77p in the book” was only linked to some of the assets of the fund, rather than its entirety.
“Only a minute of investor minority was sufficiently committed to even start to understand the shades and subtleties of what was going on,” they argue.
The Woodford Equity Institute Fund collapsed in 2019 after a number of investors withdrew their money for investments concerning investments.
The repair regime was proposed by Link Fund Solutions (LFS), the former authorized business director of the fund.
He came after the FCA investigated and three groups of investors filed prosecution in the way LFS had managed the fund.
An FCA spokesperson said that the size of the repair regime did not reflect investment losses due to the fund’s underperformance.
“Instead, it covers the losses that came from the conduct of Link Fund Solutions, which we consider to be below the required standards,” they added.
“The program has offered the fastest and best chances to get a better result than what could be achieved by any other means. The regime was approved by more than 90% of investors.”
Almost 94% of investors supported the remuneration scheme during a vote in December 2023, although only 54,000 voted. It was approved by a high court judge last year.
