Yesterday (7 September), investors received a practice statement letter from Link Fund Solutions, offering a timeline and further detail on the deal first brought to public attention in April of this year.
Darius McDermott, managing director at Chelsea Financial Services, described it as “the best deal investors will get”, adding “there is a reason why the FCA has backed it”, while Jason Hollands, managing director of Bestinvest, said while it will not leave investors “feeling pleased…it is the only credible way forward”.
Woodford investors set for early 2024 payout if scheme passes
Ryan Hughes, head of investment partnerships at AJ Bell, praised the “hugely patient” investors who have suffered through a “long, drawn out process”, but added that, if approved, the deal marks a “light at the end of the tunnel”.
However, while Dzmitry Lipski, head of funds research at interactive investor, said the offer brought by LFS “deserves attention”, he added that investors must approach the vote with “careful thought”, as a positive vote would “settle any claims that investors may have against [LFS] for its role as authorised corporate director”.
Alongside this concern, Daniel Kerrigan, partner at Harcus Parker, raised the lack of clarity surrounding whether compensation from the Financial Services Compensation Scheme would be available or not.
The practice statement letter noted the FSCS had yet to make a determination regarding any potential compensation and also suggested that if investors vote for the scheme, it would likely prevent investors pursuing any claims with the FSCS.
Kerrigan argued: “‘It seems to me that this letter is trying to sweep the FSCS compensation issue under the carpet but instead it has just left a huge black hole. If investors do not know if they can claim from the FSCS it makes it impossible for them to make an informed decision.
FCA warns against ‘unrealistic return’ of private Woodford litigation
“We have serious concerns that, as Link has suggested they will, investors will lose their right to claim from the FSCS if the Scheme is approved.
“I cannot understand how the FCA allows this guidance to be sent to investors without first establishing whether these victims of the fund have a right to make a claim from the FSCS.”
He added that “nearly all” investors represented by Harcus Parker had investments lower than the £85,000 compensation threshold.
Harcus Parker wrote to the FSCS on 16 August seeking clarity on whether investors will be able to make a claim to the FSCS.
“There is a wider issue here of the FSCS existing to give confidence to the market if things go badly wrong. I question how the FCA can act as a negotiator and a regulator at the same time,” he added.
