More than 5,000 investors who placed funds in Neil Woodford’s now-collapsed equity fund are suing the UK’s largest investment platform, Hargreaves Lansdown.
The investors claim the platform continued to promote the fund despite being aware of its ongoing issues.
According to claims management firm RGL Management, the number of claimants has surged almost twofold in the past two years, increasing from 2,750 to over 5,000.
The total value of claims is expected to exceed £200 million, with the average individual claim, including interest, estimated at £20,000.
Neil Woodford’s Equity Income Fund (WEIF) was shut down in October 2019 after investors began pulling out due to poor performance, which included struggling company investments and illiquid assets.
The fund, which was heavily marketed by Hargreaves Lansdown, was eventually frozen, and efforts to liquidate it were initiated. At the time of its closure, approximately 300,000 individuals had invested in the fund, with 130,000 using Hargreaves Lansdown.
RGL filed an initial legal claim in October 2022 against Hargreaves Lansdown in the High Court, and further claims are expected to be filed by March 2024, potentially pushing the total number of claimants to 10,000.
RGL argues that Hargreaves Lansdown continued to recommend the troubled Woodford fund even as the platform was aware of its significant portfolio diversification and liquidity issues. Michael Green, Director at RGL, stated that the addition of thousands more claimants moves them closer to holding Hargreaves Lansdown accountable for their actions regarding the fund.
Investors involved in the lawsuit seek to recover their capital losses and claim damages for the missed opportunity to invest in alternative funds that may have produced better returns.
In the aftermath of the fund’s collapse, Link Fund Solutions, the administrator for the failed Woodford fund, reached a £230 million settlement to compensate affected investors.
The redress scheme, approved by the High Court in February 2023, has already distributed £185.7 million to customers, and additional payments are expected. To date, investors have received 67p for every £1 invested, with a further 10p on offer through the compensation scheme.
Hargreaves Lansdown has yet to comment on the ongoing legal proceedings.
