Two solicitors are examining possible claims against Hargreaves Lansdown in the wake of the closure of Neil Woodford's Equity Income fund.
Law firms Slater & Gordon and Leigh Day are investigating whether consumers who invested in Neil Woodford’s funds through Hargreaves Lansdown's platform, multi-manager funds or advisers have legal recourse with the courts or the ombudsman for any losses they might incur. No claims have yet been filed by either firm.
The Woodford Equity Income and Income Focus funds both featured on the Hargreaves Wealth 50 buylist and are both currently suspended, with investors unable to pull their money out.
Mr Woodford closed Woodford Investment Management earlier this month following fund administrator Link's decision to wind down the Equity Income fund, which in turn led to the temporary suspension of the Income Focus fund.
Hargreaves featured the Woodford Equity Income fund on its buylist until the point at which it was suspended on June 3. The subsequent decision to wind-up the fund is expected to crystallise losses for investors.
Woodford’s Equity Income fund also featured in six of Hargreaves’ own multi-manager funds, making up between 2 and 11 per cent of each portfolio.
Kamran Vojdani, solicitor at Leigh Day, said the firm had received more than 500 enquiries about Hargreaves' role in the Woodford debacle, from those who invested in the multi-manager funds, invested directly via the Wealth 50 buylist or used the firm’s in-house advisers.
He said: “It’s been very useful to speak to the enquirers as we try to piece the pieces together.
“A lot of people do seem to feel like Hargreaves was pushing the Woodford funds but at the moment we're just assessing whether we can take it forward.”
Slater and Gordon stated they were investigating claims as to whether Hargreaves’ involvement in promoting the Woodford funds via its buylist “blurred the lines between marketing and research”.
Gareth Pope, head of group litigation at Slater and Gordon, said: “We’re concerned to establish if there was any actionable wrongdoing or conflict of interest by Hargreaves in continuing to include Woodford funds on their best buylists if it had concerns as to their underlying investments.
“We’ll also be looking at the price achieved when buying and selling instruments, such as ordinary shares, on the Hargreaves platform and whether or not this represents best execution.”
The law firm noted the best buylists continued to promote Mr Woodford’s Equity Income fund to clients even after concerns were first raised about the level of unquoted and hard-to-sell assets it held in late 2017.
Hargreaves has confirmed it started putting pressure on Mr Woodford to change tack with the fund in November 2017 after it identified an increase in the proportion of small and unquoted assets within the mandate’s holdings.
Such unquoted assets eventually led to the fund’s suspension when Kent County Council tried to pull its £260m investment in the flagship fund at the end of May.
Last week experts suggested Hargreaves’ role in the Woodford saga could lead to further scrutiny of its services by the Financial Ombudsman Service, claiming that the wording surrounding the Wealth 50 list was “similar to that of advice” They said a "consumer-centric" Fos could be inclined to side with consumers who thought they were being advised by the Wealth 50 recommendations - despite that not being the case.
Hargreaves has lost nearly £2m in fees as a consequence of Mr Woodford’s fund's suspension, as investors pulled millions from the firm’s multi-manager funds from June onwards.
Hargreaves Lansdown declined to comment.
imogen.tew@ft.com
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