East Midlands-based law firm Nelsons is currently supporting clients considering legal action against Hargreaves Lansdown following the failure of the Woodford Equity Income Fund.
The FTSE 100 company continued to heavily promote Woodford and its Equity Income Fund as ‘best buys’ – only withdrawing its recommendation when the fund was suspended following poor performance. It is estimated that 300,000 Hargreaves customers invested in the fund, which is approximately a third of its total.
Cathryn Selby, Partner and Head of Nelsons’ Dispute Resolution Team, specialises in professional negligence claims. She is advising clients from across the East Midlands who are expected to suffer significant financial losses after investing in the Woodford Equity Income Fund, which will be wound down from 2020.
She said: “The winding up of the fund and the closure of Woodford Investment Management has sent shockwaves through the financial landscape, leaving many dissatisfied clients seeking legal advice as more information comes to light.
“Questions are being asked of the platforms and financial advisers that recommended investment in the fund and whether they were acting in their customers’ best interests by doing so. We are currently investigating various legal avenues for achieving compensation for those losses, including claims against Hargreaves Lansdown for its promotion of the fund.
“Controversially, Hargreaves Lansdown promoted the Woodford Equity Income Fund via its Wealth 150 and, later, Wealth 50 ‘best buy’ lists – and continued to do so until the fund was suspended in June. It’s clear that many investors relied upon the representations made by the positive wording on the website, or in its magazine, when making investment decisions.”
Link Fund Solutions, which runs the administration of the Woodford Equity Income Fund, has said the first pay out to investors is anticipated at the end of January. Cash will be returned ‘pro rata’, meaning in proportion to the size of their investment.
Cathryn added: “Investors will get their money back in stages, but it is without doubt that they will face heavy financial losses – forecasted at between 32.5% and 42.6% of their original investment. The Financial Services Compensation Scheme can pay compensation for losses of up to £85,000 if a financial firm is unable to pay back money it owes. The scheme has said it is monitoring developments, however, is not expecting to be involved.
“This will come as very bad pre-Christmas news for the many investors who have already seen the value of their funds fall in value. If you believe you were mis-sold your investment, please do seek legal advice as it’s likely you may have a claim for compensation.”
For more information on Nelsons’ professional negligence department or to discuss your circumstances, please visit www.nelsonslaw.co.uk/professional-negligence/professional-negligence-claims-financial-advisers or call 0800 024 1976.