Financial services firm Hargreaves Lansdown is facing a multi-million pound lawsuit over its promotion of disgraced stockpicker Neil Woodford’s equity fund.
The Bristol-based FTSE-100 company is being sued by claims management business RGL on behalf of 3,200 investors, who were among hundreds of thousands of people left with significant financial losses when the Woodford Equity Income Fund (WEIF) collapsed in 2019.
RGL has filed a claim with the High Court and is seeking up to £100m in compensation from HL and fund administrator Link Solutions. It is the third lawsuit brought against Link in relation to the fund, but RGL is the first to target HL over its participation in the scandal.
HL recommended Neil Woodford's fund on its influential ‘best buy’ list of investments until the multi-billion-pound vehicle was frozen in June 2019. That year, HL’s chief executive Chris Hill sent a letter to the Treasury Select Committee, which said more than 130,000 of the company's clients were invested in the WEIF fund at the time.
HL and Link declined to comment on the lawsuit from RGL, but have previously denied allegations made against them.
RGL said it is assessing the potential range of claims available to retail investors in WEIF including anyone who invested through the HL platform - either directly or via HL’s multi manager fund - but also anyone who did not invest via HL.
“The RGL Group is resolute that both Hargreaves Lansdown and Link should be held accountable,” Alexander Weinberg, partner at law firm Wallace, which has been hired by RGL to handle the case, told the FT.
The Financial Conduct Authority (FCA) is currently investigating Link’s involvement in the fund. Last month, the FCA said it was likely to look to require Link to pay a financial penalty and/or consumer redress, although it said it was not a final decision - and that Link could challenge any proposed action at the Regulatory Decisions Committee.
The FCA said: “The FCA’s current view is that the redress payment LFS could be required to pay may be up to £306m. This redress proposal reflects the FCA’s current view of LFS’ failings in managing the liquidity of the WEIF. It does not reflect any amount which may be owed to anyone else, including members of the fund, as a result of potential wrongdoing by other parties.”
The news comes as Mr Hill announces plans to quit HL after six years at the helm of the business. He informed the board on Monday (October 17) he will remain in the top job at the Bristol-based company until his successor is appointed - and will allow time for a handover up to November next year.
The 51-year-old, who was formerly chief financial officer of Travelex, took over the running of the business in 2017 after joining HL in 2016.
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