After hearing arguments from interested parties, Mr Justice Richards said he 'saw no reason' to overrule the overwhelming number of investors who supported the compensation plans.
Here, Which? takes a look at what happened to the fund, how to access the compensation scheme, and what protections investors have if things go wrong.
What is the Woodford redress scheme?
Link Fund Solutions and the Financial Conduct Authority (FCA) announced a scheme in April to recover some of the remaining losses suffered by investors in the collapsed Woodford Equity Income Fund.
The scheme will pay back up to around £235m. The FCA said the scheme will recover approximately 77p in the pound for investors in the fund, though this figure has been contested by activist group Transparency Task Force, which argues it does not represent the 'true losses' of investors.
The key drawback of the scheme is that investors will no longer be able to take claims against Link Fund Solutions to the Financial Ombudsman Service (FOS) or the Financial Services Compensation Scheme (FSCS).
When investors in the fund were called to approve or reject the scheme, more than 54,000 voted and nearly 94% backed the scheme.
The FCA has said this scheme ‘won’t be the end of the story’, as it continues to investigate other parties involved.
What happened to the Woodford fund?
Neil Woodford, who ran the Woodford fund, had developed a reputation as a ‘star’ fund manager – even being awarded a CBE for services to the economy.
After a few years of strong performance, the Woodford Equity Income Fund’s performance started to decline, and investors began to take more and more money out.
In 2019, there was not enough easily accessible cash to pay out to exiting investors, and the fund was frozen to prevent anyone else from taking out their money.
Too much of the fund was invested in ‘illiquid’ assets, which are difficult to sell. So to sell them more quickly, some assets had to be sold for less than they were worth – exacerbating the poor performance of the fund.
The FCA found that Link Fund Solutions, who were supposed to oversee the running of the fund, failed investors who didn’t redeem their investments before the fund was suspended.
Find out more:How do Woodford investors access compensation?
Eligible investors – who didn't take out their investments before the fund was suspended – shouldn't need to actively seek out this compensation.
investment platformThe first redress payment is expected in April, though if this judge’s ruling is appealed, that could be pushed further back. Appeals can be launched up to 23 February.
The first pay-out from this settlement redress will be an amount between £180m and £200m.
If you have any questions about the scheme, you can contact Link Fund Solutions at lfsoa@huntswood.com, or call the dedicated helpline on +44 (0)20 3991 0224.
Will you get compensation if your investment collapses?
Generally speaking, no. When you invest, you are accepting that you could lose some or all of the money you put in if something goes wrong.
There are some exceptions to this – as we can see in the case of the Woodford fund.
Investors in the Woodford fund are receiving compensation because the fund collapsed due to mismanagement by the people running the fund, rather than because of poor performance.
a financial adviserThe two main routes to claim compensation for an investment gone wrong are through the Financial Ombudsman Service (FOS) and the Financial Services Compensation Scheme (FSCS).
Find out more:How to invest safely
That being said, there are steps you can take to lessen the damage of a single investment going wrong in your portfolio:
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