More than 5,000 investors now suing Hargreaves Lansdown

More than 5,000 people who invested in Neil Woodford’s collapsed ownership financing distribution are suing Hargreaves Lansdown, claiming that the property platform was still promoting the financing distribution even when it was aware of its problems.

The number of people suing Hargreaves Lansdown, the UK’s largest property site, has almost doubled in the history two years, according to the claims management firm RGL Management. Two years ago the number of people taking part stood at 2,750.

RGL said it expects the claims to total more than £200m, with the average person claim, including yield, about £20,000.

The Woodford ownership income financing distribution (WEIF), the flagship financing distribution run by the former star distribute picker Woodford, failed in October 2019 after investors rushed to withdraw money in response to a raft of poorly performing business investments, including some challenging-to-sell, illiquid assets. The financing distribution was frozen and later closed and wound up.

About 300,000 people had invested in the financing distribution, including 130,000 through Hargreaves Lansdown.

RGL filed an initial claim in the high court against Hargreaves Lansdown in London in October 2022. The firm said it was processing further claims and would file another tranche, with thousands more claims, by March. The number of claimants could reach 10,000.

RGL argues, on behalf of investors who lost their reserves, that Hargreaves Lansdown continued to recommend the Woodford financing distribution correct up to the day of its collapse, even though the property platform was “aware of the financing distribution’s longstanding financing distribution collection variety and funds flow issues”.

Michael Green, director of RGL, said: “Adding thousands more claimants today to the RGL throng action represents another step closer to holding Hargreaves Lansdown to account for its conduct in relation to the WEIF.”

Investors are seeking to recoup their financing distribution losses, but are also claiming damages for the lost chance of investing in alternative investments that would have generated positive returns.

Last year, the administrator of the failed Woodford financing distribution, Link financing distribution Solutions, agreed to pay £230m to assist regulators to compensate more than 300,000 customers. That redress scheme was approved by a high court judge in February, and the first payments, totalling £185.7m, were made to customers in March.

Investors have already had financing distribution representing 67p in the pound returned to them via distributions since the financing distribution’s collapse in June 2019, and the redress scheme is offering a further 10p in the pound.

Link was responsible for monitoring and supervising the investments executed by Woodford before the financing distribution failed. It was found to have made “critical mistakes and errors” after an investigation by the financial Conduct Authority, particularly in ensuring it was able to easily repay customers who might desire to withdraw their investments.

Woodford’s ownership financing distribution was worth more than £10bn at its peak but suffered from several poorly performing investments in companies including the estate agent Purplebricks, the finance firm Burford financing distribution and the doorstep lender Provident financial.

Hargreaves Lansdown did not respond immediately to a request for comment. It previously rejected all the claims made by RGL when it filed for the first set of claimants in 2022 “for lack of a substantive basis of claim”.