Hargreaves Lansdown is facing a group lawsuit from more 5,000 people who invested in Neil Woodford’s collapsed equity fund via its pensions and investment platform.
The claim is being led by claims management firm RGL Management, which says Hargreaves continued to promote the fund to customers even when it was aware of its "portfolio diversification and liquidity issues".
Woodford Equity Income grew to be one of the most popular investment funds in the UK following its launch in 2014, peaking at more than £10 billion, but some investors began to jump ship over their concerns about the poor performance of some investments and a high proportion of illiquid assets.
In June 2019 it was gated by fund administrator Link Fund Solutions following a rush of investor withdrawals, with a final valuation of £3.7 billion, at which point there were around 300,000 investors trapped, including about 130,000 via Hargreaves Lansdown.
RGL filed an initial tranche of claims in October 2022 but said claims can still be brought and that it plans to file another tranche by March 2025, estimating the number of claimants could reach 10,000.
The firm said it expected the claims to total at least £200 million, with around 2,000 new claimants having been been added in the past two years.
Michael Green, director of RGL, said: “Adding thousands more claimants today to the RGL Group action represents another step closer to holding Hargreaves Lansdown to account for its conduct in relation to the WEIF.”
Earlier this year a High Court judge approved a redress scheme from Link to share out compensation of £230 million to trapped investors.
But a group of campaigning investors accused the UK's financial watchdog of misleading investors about the redress scheme, saying the Financial Conduct Authority "knowingly and wilfully misled" in an attempt to avoid a substantial claim on the Financial Services Compensation Scheme.
In a much-criticised and slow process, Link has also paid back around two-thirds of the value of the assets at the time the fund was gated, around 67p in the pound, with the redress scheme offering a further 10p.
RGL said even if investors have received compensation via the Link redress scheme, the legal claim for losses against Hargreaves "may still be very significant".