Hargreaves Lansdown, the UK’s biggest retail investment platform, is being sued by more than 5,000 investors who claim it kept recommending Neil Woodford’s equity fund even as it ran into problems.
After filing an initial tranche of claims in October 2022 on behalf of investors who suffered losses in the collapse of the vehicle, litigation firm RGL Management said more than 2,000 people had been added to the High Court lawsuit against Hargreaves Lansdown.
RGL filed on behalf of the new claimants on Friday and expects to add more Hargreaves Lansdown customers to the lawsuit next year.
RGL, which is working with law firm Wallace LLP, said the average individual claim was around £20,000, including interest.
Hargreaves Lansdown declined to comment. It rejected all of RGL’s claims in 2022 “for lack of a substantive basis of claim”.
Nearly 300,000 people invested in Woodford’s UK Equity Income Fund (WEIF) through Hargreaves Lansdown after it launched in 2014, accounting for for £1.6bn of its total £3.7bn.
The fund was frozen in June 2019 after its poor performance led investors to pull their money. It closed in October 2019, leaving thousands of investors out of pocket.
Link Fund Solutions, Woodford’s fund administrator, has paid compensation to those who suffered losses via a redress scheme agreed with the Financial Conduct Authority last year, worth up to £230m.
RGL said its claim was for “investor losses sustained as a result of Hargreaves Lansdown’s conduct in continuing to recommend [Woodford’s fund] right up to the day of its highly publicised collapse, despite Hargreaves Lansdown being aware of the fund’s long-standing portfolio diversification and liquidity issues”.
It added that claimants were seeking reimbursement for the losses they incurred and damages for missing out on alternative investments.
The firm said it “appears [Hargreaves Lansdown] knew of liquidity issues in the WEIF from November 2017”.
If the claim succeeds, the “amount to be deducted from gross proceeds… by the RGL Group will be 25 per cent including VAT”, the firm said.