The collapse of UK star stock picker Woodford's investment fund in 2019 resulted in significant losses for approximately 300,000 investors. These investors have expressed their disappointment with the UK's financial regulators and are calling on members of Parliament to launch an inquiry into the matter. They believe that the regulators failed to adequately protect their interests and are confused by the details of the compensation scheme.
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03-29, 2025In 2023, the UK's Financial Conduct Authority (FCA) announced a "compensation scheme," claiming that it would allow investors to recover approximately 77% of their losses. However, some investors have stated that this figure is misleading and that the scheme's implementation has actually prevented them from accessing other consumer protections. They argue that the scheme does not adequately consider the actual losses incurred by investors and that there are shortcomings in its communication.
The FCA, on the other hand, has stated that the scheme provides the "fastest and best opportunity" to achieve "a better outcome than might otherwise have been achieved." The agency emphasizes that the size of the compensation scheme does not reflect investment losses caused by poor fund performance, but rather covers losses caused by misconduct on the part of Link Fund Solutions. The FCA believes that Link Fund Solutions' conduct failed to meet the required standards.
Ian Duffield and his wife, Linda, from Manchester, invested £234,000 of their pension savings in Neil Woodford's fund. They originally believed that most of their funds would be protected because the fund advertised its protection under the Financial Services Compensation Scheme (FSCS), which provides compensation when financial firms collapse. However, after the fund collapsed, the Duffields, while recovering some funds through the sale of fund assets, still lost approximately £107,000. Ian stated that when the compensation scheme was announced, they initially thought they could recover most of the remaining amount, but this was not the case because the scheme considered the funds they had already received.
The All-Party Parliamentary Group on Investment Fraud and Fairer Financial Services (APPG) has written to the House of Commons Treasury Committee, requesting them to investigate how the FCA handled the fund's collapse, including how the compensation scheme was formulated. The APPG will point out in a report to be released on Tuesday that the FCA failed to adequately communicate that its "77%" figure related only to a portion of the assets in the fund, not all of them. They believe that only a tiny minority of investors fully engaged with, or even began to understand, the nuances and complexities of what happened.
