Fallen hero: closed-end fund boss Neil Woodford
The Woodford investment scandal is like a sore that never properly heals. Five years after the dramatic (and expensive) closure of the £3.7bn Equity Income Fund run by Neil Woodford, the financial wounds he inflicted on investors still cry.
In recent weeks, the 300,000 investors who had money trapped in the fund when it closed in June 2019 have taken a series of hits (the fund was closed because it could not meet a multimillion-dollar redemption request from an institutional investor).
Firstly, investors have been deceived with what can only be described as minimal compensation in an agreement reached between the regulator (the Financial Conduct Authority) and Link Fund Solutions (the fund supervisor who failed to keep adequate track of what that Woodford was doing). invest in).
Then, to rub salt into their already painful financial wounds, many investors who joined class actions against Link have been told that a considerable part of their compensation will be eroded by a combination of claims handling fees, VAT, costs insurance and taxes on insurance premiums. (IPT).
As I exclusively reported earlier this month (and the Times Money section followed up flatteringly eight days ago), claims management firm Harcus Parker has written to investors who joined its class action telling them they could see more of half of his compensation absorbed by fees. Leigh Day has also told members of her action group to expect bills.
Such actions against Link came to a screeching halt once the £230m redress scheme was finalised. Some members of the group were disappointed, believing that actions offered the best path to a fair compensation agreement.
But such disappointment pales in the face of outrage now felt as claims companies struggle to cover their costs despite promoting the group’s actions on a “no win, no fee” basis. As Harcus Parker claims member Ian Forbes told me earlier this month: ‘Harcus promised us adequate compensation, failed to deliver and now wants a share of the reparation payment that had nothing to do with them. I’m shocked.’ Ian has since sent an email to Harcus stating that his decision to charge customers is “morally scandalous.”
Fortunately, not all organizers of group actions against Link have sought to mitigate the costs.
A few days ago, litigation firm RGL confirmed that Woodford investors who joined its class action against Link would not be charged a penny in fees. Explaining his favorable stance to investors, director Michael Green said Equity Income investors had “suffered quite a bit at the hands of Woodford and, more recently, the derisory deal Link offered them”.
Echoing the sentiments of Ian Forbes, Mr Green added: “RGL was not involved in the Link scheme so considers it fair not to benefit from it.”
While Neil Woodford (facing possible enforcement action from the regulator) rubs investors’ noses in the sand with the launch of a new blog (where he claims: “I am neither a hero nor a villain”), the decision of RGL’s treatment of its clients fairly represents a small bright spot in an investment scandal that casts a bad light on so many people.
By “many” I mean the regulator; Link; some of the claims management companies; fund platforms that promoted Woodford as if he were an investment messiah; and a large portion of the financial media (including me) who did not investigate the Woodford Equity Income Fund until it was too late.
And of course, let’s not forget Neil Woodford: “neither hero nor villain.”
There is no excuse for these credit card rate increases
Punitive: an Amex Gold ad
Credit card detective Peter Wall, a retired lawyer from Birmingham, is back in touch. Earlier this year, he informed me of M&S Bank’s decision to increase its credit card interest rate from 21.9 per cent to 24.9 per cent, effective last month.
Although the base rate has remained fixed at 5.25 per cent since August last year, the bank justified the increase by claiming that “increases in the Bank of England’s base rate affect the cost of offering credit to our customers.” “.
Increases? When she questioned M&S, it told her the rate increase was necessary to ensure its products remained “sustainable”.
This time, Barclaycard has contacted Peter and told him that the interest rate on his platinum credit card will increase from 19.4 per cent to 23.9 per cent on July 22. Unlike M&S, he has not attributed the need to do so to imaginary increases in base rate. Instead, he 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 fees. What he finds intolerable is that companies use words like “sustainable” and “review” to justify increases.
The new interest rates are not as punitive as those imposed by American Express. A reader kindly sent me a photograph taken on the London Underground of an Amex Gold advert.
He gave the card’s representative “annual percentage rate”: a rather alarming 88.8 percent.
Hopes fade for funeral plan fund
With each passing month, the prospect of customers recovering more than a sliver of their money from the ruins of funeral plan provider Safe Hands fades… and dims. It’s a terrible situation. The Safe Hands plans went into administration in spring 2022, leaving 46,000 customers in the lurch.
They had all purchased funeral plans from the Wakefield-based company with the clear understanding that by doing so their funerals would be paid for when the time came.
Could not be farther from the truth. While the money they paid to Safe Hands was intended to be set aside in a trust fund and invested wisely on their behalf, the latest progress report from administrators FRP Advisory paints a completely different picture.
With much effort and at considerable cost to clients, FRP has been trying to track down some of these assets that were often invested offshore and in a variety of obscure financial products.
Although it has had some successes – gaining £365,000 of assets in the six months to March 22 this year – FRP admits it is unlikely to recover more than between £8.1m and £10.2m. Claims against the trust (the cost of the promised funerals) are estimated at between £61 and £70 million, a return of just 11p and 17p in the pound.
The Serious Fraud Office, with the assistance of FRP, continues to investigate what happened at Safe Hands.
I trust that the individuals responsible for this financial charade will be held accountable for their actions sooner rather than later.
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