Why did the Woodford fund fail?

The Woodford Equity Income Fund failed because it invested too much in companies that were very hard to sell quickly. When lots of investors asked for their money back, there was not enough cash available. The fund had to be suspended in June 2019 and later wound up.

Why did the FCA taken action?

The Financial Conduct Authority has fined Neil Woodford and banned him from managing funds for retail investors ( Read more here ). This is because they found that he:

• Ignored repeated warnings about liquidity (ability to give people their money back when they asked for it) and the risks of holding so many hard-to-sell assets.
• Chose to sell the easier-to-trade investments while buying more illiquid ones, which made the situation worse.
• Failed to take proper responsibility for risk management.
• Put his investment strategy ahead of the duty to protect clients and ensure they could get their money back on time.

How are investors (clients) getting their money back?

The fund was closed and the assets (investments) sold off. Investors have been receiving their share of the proceeds in stages. Unfortunately, many of the investments sold for less than expected, so there is quite a large shortfall. This means most people who invested with Woodford will not recover all the money they originally invested.

Which unsuitable assets did the fund invest in?

The FCA listed several illiquid or unsuitable companies, including:

• Benevolent AI
• Industrial Heat
• Ombu
• Sabina Estates
• Proton Partners (later Rutherford Health)

These types of investments were not appropriate for a fund that promised investors they could withdraw money quickly. There has been no commentary as to why Neil Woodford chose to invest into these assets.

What options do clients have to recover money?

• Automatic payouts: Investors will continue to receive distributions from the sale of remaining assets. No action is needed for this.
• Complaints: If you were advised to invest (by a regulated financial adviser) and believe the risks were not properly explained, you can complain to your adviser. If you are not satisfied with their response, you can take it to the Financial Ombudsman Service.
• Compensation schemes: If your financial adviser has gone out of business, you may be able to claim from the Financial Services Compensation Scheme (FSCS).
• Legal action: Some investors have joined group actions against Link Fund Solutions (the firm that operated the fund) or against advisers.

If you have a valid claim against a financial adviser, Claim My Loss (a trading style of HT Legal Ltd) is able to represent you in all aspects of making a claim whether via a direct compliant, FOS, FSCS or via legal action.

Why this matters?

When you are advised to transfer existing pensions, ISAs or Investments onto a new platform, if the advice was unnecessary or inappropriate then it is not enough to just recover the money you invested. You should also be compensated for the interest or growth you have lost on your money over the time you were invested. The principle being to put you back into the position you would have been in had the adviser not advised you to transfer your funds in the first place.

If you would like to find out how much a financial adviser claim could be worth, you can use our financial adviser redress calculator or if you have any questions, why not book an appointment with one of our financial advice claims experts today.

Information sourced via the FCA Website – https://www.fca.org.uk/publication/decision-notices/neil-woodford-2025.pdf