The Financial Conduct Authority has hit out at the “private litigation” offered to investors in the collapsed Woodford fund, days after condemning the “self-interested criticism” of the regulator’s redress deal.
In a blog post on the FCA’s website on Friday (June 2), Therese Chambers, joint executive director of enforcement and market oversight, said the FCA’s redress scheme is the “quickest and best way” to return as much money to investors as possible.
She highlighted the “voluntary” contribution from Link Group (parent company of Link Fund Solutions) of £60mn to the £235mn redress package agreed, which is not available to investors through either separate legal action or action anyone else could take, including the FCA.
“This is despite unrealistic promises that there could be more money recovered through private litigation,” Chambers said.
The redress payment is made up of LFS's assets plus part of the proceeds from the sale of LFS (without the Woodford liability) to Dublin-based Waystone Group.
She added that the decision about the redress scheme is “rightly” down to Woodford investors, and a majority of those voting needs to agree to the scheme in order for it to go ahead, as well as holders of 75 per cent by value of relevant claims.
Chambers said if investors vote in favour of the scheme, it will not “be the end of the story”, as parties other than Link are under investigation.
Woodford investors entitled to vote on the redress scheme will receive more information next month.
Last week, Chambers encouraged investors to “seriously consider” voting in the redress scheme, saying she had noticed some “self-interested criticism” about it, and the “suggestion dangled” that there could be greater financial settlements if victims join a private litigation fund.
