JEFF PRESTRIDGE: Finally… a small ray of hope in Neil Woodford’s never-ending investment scandal

The Woodford investment scandal is like a wound that never heals properly. Five years after the dramatic (and costly) closure of Neil Woodford’s £3.7 billion Equity Income Fund, the financial wounds it inflicted on investors continue to linger.

In recent weeks, the 300,000 investors who had money in the fund when it closed in June 2019 have taken a series of blows (the fund was closed because it could not meet a multi-million pound redemption request from an institutional investor).

Firstly, investors have been fobbed off with what can only be described as the strictest minimum compensation in an agreement between the regulator (the Financial Conduct Authority) and Link Fund Solutions (the fund regulator, which failed to properly keep track of what Woodford). invest in).

To rub salt in their already painful financial wounds, many investors who joined class actions against Link have now been told that a significant portion of their compensation will be eroded by a mix of claims management fees, VAT, insurance costs and insurance premiums. (IPT).

As I exclusively reported earlier this month – and the Times Money section flatteringly followed up eight days ago – claims management firm Harcus Parker has written to investors who joined the class action, telling them they could see more than half of their compensation absorbed by fees. Leigh Day has also told members of her class action to expect bills.

Such actions against Link came to an abrupt halt when the £230 million compensation plan was completed. Some group members were left disappointed, believing the actions offered the best route to a fair compensation deal.

But this disappointment pales in comparison to the outrage they now feel as companies rush to cover their costs despite promoting class actions on a ‘no win, no fee’ basis. As Ian Forbes, a member of the Harcus Parker claim, told me earlier this month: ‘Harcus promised us proper compensation, failed to deliver and now wants a share of reparations that had nothing to do with them. I am shocked.’ Ian has since sent Harcus an email stating that his decision to charge customers is “morally outrageous.”

Fortunately, not all organizers of class actions against Link have tried to limit costs.

A few days ago, specialist litigation firm RGL confirmed that Woodford investors who joined the class action against Link would not be charged a penny in fees. Explaining the investor-friendly stance, managing director Michael Green said Equity Income investors had “suffered enough at the hands of Woodford and more recently the ridiculous Link settlement they were offered”.

Echoing the sentiments of Ian Forbes, Mr Green added: ‘RGL had no role in the Link scheme and therefore considers it fair not to benefit from it.’

Now that Neil Woodford (facing possible enforcement action from the regulator) is rubbing investors’ noses in the sand with the launch of a new blog (where he claims ‘I am neither hero nor villain’), represents RGL’s decision to give its customers fair deal with a trifle. bright spot in an investment scandal that has bad repercussions for many.

By ‘a lot’ I mean the supervisor; Clutch; some claims management companies; fund platforms that promoted Woodford as if he were an investment messiah; and much of the financial media (myself included) who didn’t dig into the Woodford Equity Income Fund until it was too late.

And of course let’s not forget Neil Woodford – ‘neither hero nor villain’.

No excuses for these credit card rate increases

Punishing: An ad for Amex Gold

Credit card sleuth Peter Wall, a retired lawyer from Birmingham, has made contact again. Earlier this year he told me about M&S ​​Bank’s decision to increase the interest on its credit card from 21.9 to 24.9 percent with effect from last month.

Despite the base rate remaining at 5.25 per cent since August last year, the bank justified the increase with ‘increases to the Bank of England base rate that impact the cost of offering credit to our customers’.

What is increasing? When he challenged M&S, the company told him the rate hike was necessary to ensure its products remained ‘sustainable’.

This time Peter has been approached by Barclaycard, informing him that the interest on his platinum credit card will increase from 19.4 percent to 23.9 percent on July 22. Unlike M&S, the company has not attributed the need to do this to imaginary increases in interest rates. basic rate. Instead, the company says the increase is the result of a “review” of its credit card products.

Peter believes that card issuers have every right to increase their rates. What he finds intolerable is that companies use words like ‘sustainable’ and ‘review’ to explain away the increases.

The new interest rates are not as punishing as American Express’s. A reader kindly sent me a photo, taken on the London Underground, of an advertisement for Amex Gold.

It yielded the map’s representative percentage: a rather scary percentage of 88.8 percent.

The hope for a funeral fund is fading

With each month that passes, the prospect of customers getting anything back other than a little bit of their money from the ruins of Safe Hands funeral insurance becomes increasingly remote. It’s a terrible situation. Safe Hands Plans went into administration in the spring of 2022, leaving 46,000 customers in the lurch.

They had all bought funeral plans from the Wakefield-based company, with the clear understanding that it would pay for their funerals when the time came.

Nothing could be further from the truth. Although the money they paid to Safe Hands was intended to be placed in a trust fund and invested wisely on their behalf, the latest progress report from administrators FRP Advisory paints a very different picture.

With great effort and at significant cost to clients, FRP has attempted to unearth some of these assets, which were often invested offshore and in a range of obscure financial products.

Although it has had some successes – realizing £365,000 in assets in the six months to March 22 this year – FRP admits it is unlikely to recover more than £8.1 million to £10.2 million. Claims against the trust (the cost of promised funerals) are estimated at between £61 million and £70 million – a return of just 11p and 17p in the pound.

The Serious Fraud Office, assisted by FRP, continues to investigate what happened at Safe Hands.

I trust that the people responsible for this financial travesty will sooner or later be held accountable for their actions.