Finally… a tiny bright spot in the never-ending Neil Woodford investment scandal

The Woodford investment scandal is like a sore that never properly heals. Five years on from the dramatic (and costly) closure of the £3.7 billion Equity Income Fund run by Neil Woodford, the financial wounds it inflicted upon investors continue to weep.

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

First, investors have been fobbed off with what can only be described as the barest minimum of compensation in a deal struck between the regulator (the Financial Conduct Authority) and Link Fund Solutions (the fund’s overseer which failed to keep proper track of what Woodford was investing in).

Then, to rub salt into their already painful financial wounds, many investors who joined group actions against Link have now been told that a sizeable chunk of their compensation will be eroded by a mix of claims management fees, VAT, insurance costs and insurance premium tax (IPT).

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

Such actions against Link came to a thundering halt once the £230 million redress scheme was finalised. Some group members were left disappointed, believing the actions offered the best route towards a fair compensation deal.

But such disappointment pales into insignificance against the outrage they now feel as claims companies scramble to cover their costs despite promoting the group actions on the basis of ‘no win, no fee’. As Ian Forbes, a member of the Harcus Parker claim told me earlier this month: ‘Harcus promised us proper compensation, did not deliver, and now wants a slice of a redress payment that had nothing to do with them. I am appalled.’ Ian has since emailed Harcus, stating its decision to charge clients is ‘morally outrageous’.

Thankfully, not all organisers of group actions against Link have sought to mitigate costs.

A few days ago, specialist litigation company RGL confirmed that Woodford investors who joined its group action against Link would not be charged a penny in fees. In explaining its investor-friendly stance, director Michael Green said that Equity Income investors had ‘suffered enough at the hands of Woodford and more recently from the derisory Link settlement offered to them’.

Echoing the sentiments of Ian Forbes, Mr Green added: ‘RGL played no part in the Link scheme, so considers it fair not to benefit from it.’

With Neil Woodford (facing possible enforcement action from the regulator) rubbing investors’ noses in the sand with the launch of a new blog (where he claims ‘I am neither hero nor villain’), RGL’s decision to treat its customers fairly represents a tiny bright spot in an investment scandal that reflects badly on so many.

By ‘many’, I mean the regulator; Link; some of the claims management companies; fund platforms who promoted Woodford as if he was an investment messiah; and a big chunk of the financial media (me included) who did not probe 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 excuse for these credit card rate hikes 

Credit card sleuth Peter Wall, a retired solicitor from Birmingham, has been in touch again. Earlier this year, he tipped me off about M&S Bank’s decision to increase the interest rate on its credit card from 21.9 to 24.9 per cent, effective from last month.

Despite base rate having remained fixed at 5.25 per cent since August last year, the bank justified the rise on the grounds of ‘increases in the Bank of England base rate impacting the cost of offering credit to our customers’.

What increases? When he challenged M&S, it told him that the rate rise was necessary to ensure its products remained ‘sustainable’.

This time, Peter has been contacted by Barclaycard, telling him the interest rate on his platinum credit card will rise from 19.4 per cent to 23.9 per cent on July 22. Unlike M&S, it has not attributed the need to do this to imaginary increases in base rate. Instead, it says the hike is a result of a ‘review’ of its credit card products.

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

The new interest rates are not as punitive as those imposed by American Express. A reader kindly sent me a picture taken in London’s Underground of an advert for Amex Gold.

It gave the card’s representative ‘annual percentage rate’ – a rather frightening 88.8 per cent.

Hopes fading for funeral plan fund 

With every month that goes by, the prospect of customers getting back anything other than a smidgin of their money from the ruins of funeral plan provider Safe Hands dims… and dims. It is an awful situation. Safe Hands Plans went into administration in spring 2022, leaving 46,000 customers in the lurch.

They had all bought funeral plans from the Wakefield-based company on the clear understanding that in so doing their funerals would be paid for when the time came.

Nothing could be further from the truth. While the money they paid to Safe Hands was meant to be ringfenced in a trust fund and invested wisely on their behalf, the latest progress report from administrators FRP Advisory paints an altogether different picture.

Painstakingly, and at considerable cost to customers, FRP has been trying to track down some of these assets that were often invested offshore and in an array of obscure financial products.

Although it has had some successes – realising £365,000 of assets in the six months to March 22 this year – FRP admits it is likely to recover no more than between £8.1million and £10.2million. Claims against the trust (the cost of funerals promised) are estimated at between £61million and £70million – a return of just 11p and 17p in the pound.

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

I trust those individuals responsible for this financial travesty are held to account for their actions – sooner rather than later.