High Court sanctions Link’s £230m Woodford redress scheme

Transparency Task Force considering an appeal

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A High Court judge has approved Link Fund Solutions’ £230m scheme of arrangement for investors in the collapsed Woodford Equity Income fund (Weif).

The decision had been delayed following the hearing over two days on 18 and 19 January.

In a judgement published on Friday, Justice Richards said: “Having considered the matter in detail, I see no reason to gainsay (contradict) the conclusion of the overwhelming majority of scheme creditors at the court meeting.”

See also: Woodford redress scheme ‘changes the game’ for consumer protections, campaign group warns

Objections

Giving his reasons for the decision, Justice Richards said that objections he had considered included the removal of retail investors’ ability to use the Financial Services Compensation Scheme (FSCS).

A number of parties involved in the case raised concerns over the scheme at the court hearing last month, arguing it forced investors to give up consumer protections under the FSCS and Financial Ombudsman Service (FOS) and should therefore be rejected.

The judgement concluded that, rather than arbitrarily taking away rights to access the FSCS and FOS, scheme creditors had overwhelmingly voted to settle their claims against LFSL and as a result there are no longer any claims that can be notified to FOS or paid out of the FSCS.

Link’s compensation scheme had been approved by 93.7% by number and 96% by value of the 54,000-strong scheme creditors at a scheme meeting in December. 

Noting that the FCA supports the scheme, the court concluded that there is nothing so wrong with the scheme that should prevent the vote from being respected.

The Transparency Task Force has said it is considering an appeal. Any party has until 23 February to challenge the ruling.

Andy Agathangelou, founder of Transparency Task Force, said: “The scheme offers an appalling outcome for those who were trapped in Woodford’s flagship fund when it was suspended in June 2019.

“The removal of statutory rights against the wishes of those concerned means the outcome of this case matters to everybody that ever has, or might ever in the future, use UK financial services.”

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