The backing of a compensation scheme for investors trapped in the failed Woodford fund will come as a relief for those waiting for more than four years, said investments managing director at AJ Bell, Ryan Hughes.
Hughes said: “Over four and a half years have passed since the fund suspended and with well over 90 per cent of investors voting in favour of the scheme, there will be many who have done so simply because they are fed up with how long this process has taken.
“While there will no doubt be some that feel that this scheme doesn’t compensate them sufficiently for their losses, others will feel that getting back around 80 per cent of the fund value on suspension will be more than they could have hoped for when the fund initially suspended.”
This week (December 14) the compensation scheme was voted through with provisional numbers showing 93.7 per cent of investors backed the proposals.
However, others unhappy with the £230mn compensation scheme have vowed to fight the decision in court.
Andy Agathangelou, founder of the Transparency Task Force and co-founder of the Woodford Campaign Group, called the vote “one-sided”.
He added: “The sanction hearing on January 18 will be our opportunity, led by barrister Damian Falkowski who is acting pro bono for us, and therefore all Woodford investors, to explain to the judge that what is being asked for is fundamentally unlawful.
"Game on; and we’re up for it. Let battle commence.”
The FCA defended its position on the compensation scheme before the vote, saying: “Given the considerable uncertainty of outcome and the time that any alternative processes would take (potentially years), the FCA continues to consider that the scheme is the quickest and best chance for investors to obtain a better outcome than might otherwise be achieved."
Next steps
A spokesperson for Link said the vote demonstrated “strong support” for the scheme.
They added: “This is an important step for the scheme, and the establishment of the settlement fund.”
The vote was held two months after a High Court order, which said a single meeting of creditors affected should be convened to vote on the proposed scheme.
Work to verify the votes cast at the meeting is still ongoing and another hearing is scheduled to take place on January 18 to approve the scheme after which there will be 21 days to appeal the decision.
It is expected the scheme will become fully effective on February 9, 2024.
Link estimates it will distribute between £183.5mn and £200mn by March 31, if the scheme is approved.
tara.o'connor@ft.com
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