A third law firm is examining possible claims against Hargreaves Lansdown in the wake of the closure of Neil Woodford's Equity Income fund.
Nelsons announced today (December 3) it was “supporting clients” considering legal action against the consumer platform which is estimated to have 300,000 customers invested in the failed fund, accounting for a third of the suspended portfolio’s total.
Cathryn Selby, partner and head of Nelsons’ dispute resolution team, said she was advising Hargreaves customers from across the East Midlands who were expected to suffer “significant financial losses” after investing in the fund.
Hargreaves was singled out for its promotion of the fund via its buylist right up to the day of suspension 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.
The law firm stated it also deals with complaints against the fund itself and how the winding up of the fund had taken place, which are not against Hargreaves.
Hargreaves did not want to comment on this story.
Ms Selby said she would “not rule out” pursuing claims against other advice firms and platforms which had promoted the fund but that it depended on who approached Nelsons with a grievance.
She said: “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 for its promotion of the fund.”
Nelsons is the third law firm to set its sights on Hargreaves in the wake of the closure of Mr Woodford’s Equity Income fund.
In October, Slater & Gordon and Leigh Day announced they were investigating whether consumers who invested in Neil Woodford’s funds through Hargreaves’ platform, multi-manager funds or advisers have legal recourse with the courts or the ombudsman for any losses they might incur.
According to Ms Selby investors are forecasted to lose between 32 and 42 per cent of their original investment.
Ms Selby said: “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.”
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.
Earlier this year 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”.