Woodford fund compensation: Investors set to receive share of £230m payout next year

Woodford fund compensation: Investors set to receive share of £230m payout next year

Investors who have been trapped in Woodford’s flagship fund, which collapsed four years ago, are set for a payout in early-2024.

More than 300,000 investors had around £3.7billion held in the Woodford Equity Income fund when it was closed in June 2019.

Today, the fund’s administrator Link Fund Solutions wrote to investors outlining an estimated timeline for compensation payouts should the proposed redress scheme goes ahead.

Investors who lost out when Woodford’s flagship fund collapsed are set for a payout in 2024 

The £230million scheme, which was announced by the FCA in April, still needs to be approved by the majority of investors.

Next month, LFS will attend a court hearing to gain permission to call a meeting to vote on the proposals which will allow investors in the fund to accept or reject the offer.

On 4 December, investors will be able to vote on the proposals. To pass, at least half of the investors representing at least 75 per cent of the value of the fund must approve the scheme.

It will also depend on the sale of Link’s fund solutions business to Waystone, which is due to complete next month.

If the scheme is approved, the first tranche of the settlement, which is due to be between £180million and £200million, will be paid in the first quarter of the year, Link said.

Link has set aside £50million as a ‘reserve’ from the distribution to cover certain cost contingencies.

Link Fund Solution’s parent company Link Group will also voluntarily contribute up to £2.5million towards costs associated with the scheme.

The FCA has said it considers the scheme the ‘quickest and best chance to obtain a better outcome’ for investors.

Ryan Hughes, AJ Bell’s head of investment partnerships said: ‘ Investors will now need to think carefully about how they wish to vote on the proposed scheme, which will happen towards the end of the year.

‘The light at the end of the tunnel for investors is coming much closer into view, but there is still a high probability that this will not be fully completed until at least the middle of 2024, at which point five years will have passed since the suspension.

‘Investors have been hugely patient in this long, drawn out process but hopefully they can genuinely see an end is in sight.’

Link has said there is no need for Woodford investors to take immediate action and warned that they will not be approached by or on behalf of Link to make a claim in the scheme.

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