FAQs for Investors
Please note that the answers to these frequently asked questions are a high-level summary only. The full terms of the Scheme are available here.
The Hearing is now complete, and the High Court has handed down a judgment sanctioning (i.e. approving) the Scheme. A copy of the judgment and the transcript from the Sanction Hearing is available here.
- Contents:
- 1. The Settlement Scheme
- 2. Timetable
- 3. LSFL's recommendation on how to vote
- 4. Could investors be better off if they vote no and the Scheme fails?
- 5. Voting
- 6. How much money will Investors receive?
- 7. The role of the Investors' Committee and Investor Advocate
- 8. Other questions
- 9. How to obtain further information
1. The Settlement Scheme
- What is a Scheme of Arrangement?
A Scheme of Arrangement (also known as a Scheme) is an agreement between a company and some or all of its Creditors. For a Scheme to become effective it must be approved by the Creditors affected by the Scheme and the Court. In this case the company is Link Fund Solutions Limited (LFSL) and the Creditors are the investors who held shares in the LF Equity Income Fund, formerly called the LF Woodford Equity Income Fund (the WEIF) at the time of its suspension on 3 June 2019 (and any person to whom they have since transferred their claims) (the Scheme Creditors). There is a film available on this site to help you understand what a Scheme of Arrangement is. You can watch it here.
2. Why is the Scheme being proposed? LFSL is the authorised corporate director (ACD) of the WEIF. The WEIF was suspended on 3 June 2019 (the Suspension Date) when LFSL concluded that the WEIF could not meet ongoing redemption requests without prejudicing the interests of remaining investors.
The Financial Conduct Authority (FCA) investigated the events that led to the suspension of the WEIF. The FCA’s current conclusions in relation to LFSL allege that:
- the investors who left the WEIF from 1 November 2018 onwards benefited disproportionately from the sale of the most liquid assets in the WEIF, compared to those investors who remained invested in the WEIF at the Suspension Date;
- the investors who continued to hold investments in the WEIF at the time of suspension were treated unfairly because they were left with a disproportionate share of less liquid assets;
- LFSL had failed to comply with Principles 2 and 6 of the FCA’s Principles for Businesses; and
- the investors who continued to hold investments in the WEIF on and after the Suspension Date were entitled to redress of up to £298 million.
LFSL disputes that it has any liability. It considers that it has carried out all of its obligations as ACD of the WEIF in a manner that is consistent with the FCA’s principles and its regulatory obligations. However, on 19 April 2023, LFSL and Link Administration Holdings Limited (LFSL’s Parent) agreed a conditional settlement with the FCA. LFSL agreed to this settlement even though it disputes that it has any liability because it believes that the settlement will produce the best outcome for investors. The purpose of the Scheme is to put in place the conditional settlement that LFSL has agreed with the FCA and the Parent.
3.What are the main terms of the conditional settlement? The Scheme will establish a fund of up to £230 million (the Settlement Fund). Every person who holds shares in the WEIF will receive a payment from the Settlement Fund in proportion to the number and class of the shares they hold. The payment from the Settlement Fund will be made in the same manner as distributions of capital are made now. In return for payment from the Settlement Fund, Scheme Creditors will release LFSL, its Parent, each member of the Link Group and their directors, partners, employees, consultants and advisers from any claims they may have against those persons relating to the WEIF.
- What happens if I no longer hold shares in the WEIF?
If you sold all of your shares in the WEIF prior to 12pm on 3 June 2019, then you are not a Scheme Creditor and you will not be affected by the Scheme. If you sold some or all of your shares after 3 June 2019, you may be a Scheme Creditor. We provide further details of who is a Scheme Creditor at question 17 below.
If you are a Scheme Creditor, and you do not currently own any shares in the WEIF, then you will need to follow up with the person who you sold or transferred your shares to, in order to get the benefit of the payments under the Scheme.
- How will the costs of the Scheme be paid?
The company (LFSL) will pay the costs of the Scheme out of its own resources. LFSL’s Parent (Link Group) will also contribute an additional £2.5 million towards the Scheme costs, if the Scheme is approved.
Because LFSL is contributing all of its available resources to the Scheme, the level of costs incurred will have an impact on the amount that is ultimately paid under the scheme to investors. Representatives of PricewaterhouseCoopers LLP have been appointed to supervise the Scheme, in the interests of all Scheme Creditors. Their role includes supervising and providing periodic reporting on Scheme costs.
- Will the costs of the Scheme come out of the WEIF?
No, none of the assets in the WEIF are being used to fund the Scheme. Over the past few years any money raised from selling assets in the WEIF has been distributed to investors and this process will continue in exactly the same way with the remaining assets of the WEIF regardless of the Scheme outcome. The Scheme is about facilitating additional money to be distributed to investors over and above the remaining assets in the WEIF.
7. I have received a letter or email. Do I need to do anything? The deadline for submitting a Voting Form was 5 p.m. (London time) on 4 December 2023. This deadline has now passed. If you have submitted a Voting Form by this deadline, but you wish to change your vote, you will be able to do so up until the start of the Scheme Meeting on 13 December 2023 by calling the Scheme helpline on +44 20 3991 0224 (local rates apply).The Scheme Meeting to vote on the Scheme proposed by LFSL has now taken place and this helpline is now closed.
To coincide with the opening of the voting portal, we have also made available more detailed information about the Scheme. In particular, we would like to invite investors to read the Letter to Investors, which is available here . This provides details of the Scheme and why it has been proposed. More detailed information about the Scheme can be found in the Explanatory Statement, which is available here. You can also refer to the Frequently Asked Questions on this page.
- What is the regulator’s view on the Scheme?
The FCA continues to consider that the Scheme offers investors the quickest and best chance to obtain a better outcome than might be achieved by any other means. LFSL is liaising closely with the FCA and will continue to do so as the Scheme progresses.
The FCA’s statement is available here.
- What is the success of the Scheme dependent on?
The Scheme cannot become effective unless both the Scheme Creditors and the Court approve the Scheme. Scheme Creditors will approve the Scheme if (i) 75% by value and (ii) more than 50% in number, of those Scheme Creditors voting on the Scheme vote in favour of it.
- What is the Explanatory Statement?
The purpose of the Explanatory Statement is to explain the terms of the Scheme of Arrangement. This document is intended to give Scheme Creditors the information they need to decide for themselves whether they agree with the proposed Scheme and the Settlement ahead of voting.
- What is the difference between the Explanatory Statement and the Practice Statement Letter?
The Practice Statement Letter was an initial outline and summary of the Scheme. Scheme Creditors should now refer to the Explanatory Statement which provides a more detailed description of the terms of the Scheme, and aims to provide Scheme Creditors with all the information they need before they vote.
2. Timetable
12. What is the potential timetable for the Scheme? The process and planned timetable for putting the Scheme in place over the coming months is as follows:
First Court Hearing: This took place on 10 and 12 October 2023. At the end of the hearing, the judge issued an order to convene a meeting of Scheme Creditors on 13 December 2023.
Deadline for registering to attend the Scheme Meeting in person: Was 5pm (London time) on 30 November 2023: Scheme Creditors who wished to attend the Scheme Meeting but were unable to do so online or by telephone must have submitted a Voting Form to LFSL by no later than 5pm (London time) 30 November 2023. This deadline has now passed, and the Scheme Meeting has now taken place.
Deadline for submitting Voting Forms: 5pm (London time) on 4 December 2023. Scheme Creditors who wished to vote on the Scheme or attend the Scheme Meeting must have submitted a Voting Form to LFSL. This must have been received by LFSL by no later than 5pm (London time) on 4 December 2023. This deadline has now passed.
Scheme Meeting: This took place on 13 December 2023. Scheme Creditors had an opportunity to discuss the Scheme with LFSL and other Scheme Creditors at the Scheme Meeting and vote on the Scheme. If a Scheme Creditor could not attend the Scheme Meeting the Chair of the Scheme Meeting could have voted for the Scheme Creditor in accordance with their wishes. The Scheme Creditor could also have asked another person to attend and vote at the Scheme Meeting for them. If Scheme Creditors wished to attend the meeting but could neither use the online facility nor the telephone, then provision would have been made for physical attendance. The Scheme Meeting took place on 13 December 2023, and the Scheme was approved by 93.7% by number, representing 96% by value, of those Scheme Creditors who attended.
Second Court Hearing: This took place on 18 January 2024. If enough Scheme Creditors voted in favour of the Scheme at the Scheme Meeting the Company would then ask the Court to approve the Scheme at a second Court hearing (the Second Court Hearing). In deciding whether to approve the Scheme the Court will consider, amongst other things, whether the Scheme Meeting was properly held, whether the class meetings were appropriately constituted and otherwise whether the Scheme is fair to Scheme Creditors as a whole. The Hearing is now complete, and the High Court has handed down a judgment sanctioning (i.e. approving) the Scheme. A copy of the judgment and the transcript from the Sanction Hearing is available here.
Filing Date: The Filing Date occurred once a copy of the Court order approving the Scheme was delivered to the Registrar of Companies. With effect from the Filing Date, Scheme Creditors will be unable to commence or continue claims against LFSL and other members of the Link Group.
Effective Time: The Scheme became fully effective on 5 March 2024.
13. When will compensation be paid? On 25 March 2024, LFSL made the Initial Settlement Account Distribution (as defined in the Scheme) in the amount of £185,717,355.72 to the WEIF. The WEIF will make an initial distribution to registered holders of shares in the WEIF on 28 March 2024. Scheme Creditors will receive payments in the same way as they have previously received capital distribution payments from the WEIF. It will take additional time for Scheme Creditors who have invested through intermediaries to receive their payments, depending on the time it takes for intermediaries to process distributions.
It is expected that further payments will be made once LFSL’s final cash position and other costs and liabilities are known.
3. LSFL's recommendation on how to vote
14. Why should I vote in favour of the Scheme? This is a decision for Scheme Creditors individually. The information in various Scheme documents and on the website aims to give Scheme Creditors the information they need to make a decision before voting.
However, LFSL recommends that you vote in favour of the Scheme for the following reasons:
- First, the Scheme provides for the maximum amount possible to be paid to relevant investors from LFSL. This is because all of LFSL’s available assets will be put into the Settlement Fund. Together with LFSL’s remaining rights under certain insurance policies (approximately £48 million) and the Parent Contribution (for further details please see point 3 below), this is expected to amount to up to £230 million;
- Second, payments are expected to be made much earlier under the Scheme than without it. The first distribution from the Settlement Fund is expected to be between £183.5 million and £200 million and is expected to be made in the second quarter of 2024. Additional payments are also expected to be made as soon as possible. By contrast without the Scheme the most likely outcome is many years of litigation, with no guarantee of any payments.
- Third, in the Scheme the Parent will make a voluntary contribution of up to £60 million to the Settlement Fund. The Parent is also making another voluntary contribution of up to £2.5 million towards the costs of implementing the Scheme. These contributions are voluntary and the Parent will not pay them if the Scheme does not go ahead.
- Fourth, the Scheme provides a convenient and streamlined process for making payments to relevant investors, as they will not need to complete any paperwork or carry out any other steps to receive payment from the Settlement Fund. Distributions from the Settlement Fund will be made automatically via the WEIF in the same way as distributions are made now.
- Finally, relevant investors will each receive the same percentage payment, because the Settlement Fund will be shared proportionally amongst investors according to the number and class of shares they hold.
There is further information on the advantages and disadvantages of the Scheme available on page [61] of the Explanatory Statement, available here.
4. Could investors be better off if they vote no and the Scheme fails?
15. What happens if the Scheme fails? If the Scheme does not go ahead LFSL intends to defend itself against the FCA’s investigation, and any claims made against it by investors. If LFSL is successful in its defence of those claims it may not be required to pay anything at all to investors in respect of their claims. If LFSL is partially successful, investors may be awarded a lower amount than the amount that they are being offered under the Scheme.
Even if LFSL is unsuccessful in defence of those claims it will have less money available to pay to relevant investors because:
1. the Parent will not pay the Parent contribution of up to £60 million to the Settlement Fund, nor the up to £2.5 million contribution to the Scheme costs. These contributions are voluntary and the Parent will not pay them if the Scheme does not go ahead;
2. the cost of LFSL’s defence may be significant and will reduce the amount of money that LFSL has available to pay compensation to the relevant investors;
3. the FCA has the power to impose a financial penalty on LFSL. As noted by the FCA in their 19 April 2023 announcement, “The FCA’s case includes a proposed financial penalty of £50 million which the FCA would not enforce if the Scheme is approved”; and
4. if the amount of compensation ultimately awarded is (or is expected to be) more than the amount that LFSL has, LFSL may have to enter into an insolvency proceeding. If LFSL enters into an insolvency proceeding, this will create additional costs. This will again reduce the amount of money that LFSL has available to pay to the investors. Also, please note question 15 below: ‘Will investors receive anything from the Financial Services Compensation Scheme?’
It is possible, that, in the circumstances above, the FSCS may provide some compensation to investors. However, as explained at question 16 below, the FSCS has not made any determination, and there is no certainty that they would make any such payments. Accordingly, while it is possible that investors could receive more money by voting against the Scheme, there is no certainty of this occurring; and any such recovery would take many years. Therefore, LFSL believes that it in the best interests of investors to vote for the Scheme. Furthermore, the FCA continues to consider that the Scheme offers investors the quickest and best chance to obtain a better outcome than might be achieved by any other means.
16. Will investors receive anything from the Financial Services Compensation Scheme (FSCS)? The FSCS is the UK’s compensation scheme of last resort for the customers of failed financial services firms. It is a matter for the FSCS to determine whether any payments may become due to investors from the FSCS. Currently, the FSCS has not made any determination in relation to any of the claims made against LFSL and the claims remain unproven. However, the FSCS has confirmed that it will assess and pay claims in accordance with its rules.
It is LFSL’s expectation that in the event that the Scheme becomes effective Scheme Creditors will not be able to pursue the claims released in the Scheme against the FSCS.
5. Voting
The deadline for submitting a Voting Form was 5 p.m. (London time) on 4 December 2023. This deadline has now passed.
17. Who is eligible to vote? Scheme Creditors were able to vote on the Scheme. These are investors who held shares in the LF Equity Income Fund, formerly called the LF Woodford Equity Income Fund (the WEIF) at the time of its suspension on 3 June 2019, and any person who they transferred or sold their shares to after this date.
Shares in the fund may have been held directly or indirectly through an intermediary such as an online investment platform. If shares in the fund were held indirectly, please consult your investment contract or contact your broker or platform to confirm who is eligible to vote on the Scheme.
There are examples of who is a Scheme Creditor on page 14 of the Explanatory Statement, found here.
18. Do I have to vote? No. There is no requirement for you to vote. However, we strongly encourage you to do so, so that your view is considered.
19. What happens if I vote no? Even if you vote no, you will still be eligible for payments from the Settlement Fund if the Scheme of Arrangement is successful.
20. Do I have to attend the Scheme Meeting in December 2023 to vote? No. There is no requirement to attend the Scheme Meeting. You can submit your vote beforehand and instruct the Chair to vote for you at the meeting. The Chair is bound to vote in accordance with your directions. There are more details on how to do so included under question 21 ‘How do I vote?’.
21. How do I vote? Whether you decide to vote online, by email, by post, or in person, you must first complete a Voting Form. Unless you have authorised someone else to complete a voting form on your behalf, and they can provide evidence of such authorisation, you will need to complete a Voting Form in your own name.
- The first and easiest option to vote on the Scheme is online via the Voting Portal, which is available here. You must submit your vote by no later than 5.00 p.m. on 4 December 2023. If choosing this option, the instructions on the portal will guide you through how to fill in the Voting Form and submit it online;
- If you are unable to submit a vote online via the Voting Portal, the second option is to download a Voting Form from the Scheme Website here, fill it in and return it by email to LFSL at lfsoa@huntswood.com or post to LFSL at LFSL Scheme Vote, PO Box 16840, Birmingham B2 2US. The Voting Form must be received by LFSL by no later than 5.00 p.m. on 4 December 2023; or
- The third option is to contact LFSL by telephone on +44 20 3991 0224 (local rates apply) and request a Voting Form to be emailed or posted to you. Completed Voting Forms may be returned by email to LFSL at lfsoa@huntswood.com or posted to LFSL at LFSL Scheme Vote, PO Box 16840, Birmingham B2 2US. Once again, the completed Voting Form must be received back by no later than 5.00 p.m. on 4 December 2023.
As part of the Voting Form, you will be asked to choose how your vote is cast at the Scheme Meeting, which will be held on 13th December 2023. You can do this in one of three ways:
- You can choose to appoint the Chair of the Scheme Meeting to vote on your behalf. They will do so in accordance with your wishes as indicated on the Voting Form you’ve filled in. There is no need to attend the Scheme Meeting in this case.
- You can also choose to attend the Scheme Meeting and cast your vote in person if you’d like to do so.
- Finally, you can ask another person to attend the Scheme Meeting and vote in your place but as already noted, they’ll need to provide evidence as part of filling in the Voting Form that they are authorised to vote as a proxy.
You do not need to attend the Scheme Meeting in order to vote on the Scheme. Anyone wishing to attend the Scheme Meeting in person must pre-register their attendance through the Voting Portal here or by telephone our helpline on +44 20 3991 0224 (local rates apply) by no later than 30 November 2023. The Scheme Meeting to vote on the Scheme proposed by LFSL has now taken place and this helpline is now closed.
Instructions will be given as to how to vote at the Scheme Meeting (if you have not already appointed the Chair or a Proxy) during the meeting itself.
If you need additional assistance to vote or to register for the Scheme Meeting, please email us at lfsoa@huntswood.com or call the helpline number on +44 20 3991 0224 (local rates apply). The Scheme Meeting to vote on the Scheme proposed by LFSL has now taken place and this helpline is now closed.
22. What information do I need to have to hand before I vote?
Before voting, please ensure that you have the following information. You will need this information to submit a valid vote or to validly pre-register to attend the Scheme Meeting. If you do not provide this information, your vote may be rejected or you may not be permitted to attend the Scheme Meeting.
If you are a Scheme Creditor completing the Voting Form on your own behalf, you will need:
1. your personal details (name, email, date of birth and phone number); and
2. the name of each intermediary (e.g. the broker or investment platform) through which you hold your shares in the WEIF (if applicable); and
3. your client number with each intermediary through whom you invested in the WEIF (if applicable); and
4. details of your shareholdings in the WEIF, including the share class(es) and number of shares for each share class that you hold in the WEIF with each intermediary; and
5. evidence that you hold a Scheme Claim. This can be in the form of: a. screenshots of your investment account showing your name, current shareholdings in the WEIF, together with your platform and client number; or
b. a letter or statement from your broker/platform showing your current holdings in the WEIF, together with your client number; or
c. if you are a direct investor, a screenshot or statement of your investment account showing your name and holdings in the WEIF. LFSL will verify this against the WEIF’s register of shareholders; or
d. if you are a holder of a Scheme Claim only, and do not hold shares in the WEIF, please provide evidence that all or any part of a Scheme Claim was transferred to you on or prior to the Record Date.
6. if you acquired your shareholdings in the WEIF after 3 June 2019, evidence of how you obtained those shareholdings.
Important note in relation to number 5 above: You only need to provide evidence of your shareholdings in the WEIF. You do not need to disclose any other investments which you may have, outside of the WEIF.
If you held shares in the WEIF on 3 June 2019, but no longer hold some or all of these shares, and you believe you are a Scheme Creditor, you should contact LFSL’s dedicated helpline on +44 20 3991 0224 (local rates apply) to register to vote. The Scheme Meeting to vote on the Scheme proposed by LFSL has now taken place and this helpline is now closed.
23. If I am voting on behalf of a Scheme Creditor, and have been authorised to do so, what information will I need to provide? 1. your personal details (name, email and phone number);
2. the name and date of birth (not applicable if the Scheme Creditor is a corporate, trust or similar entity) of the Scheme Creditor whom you represent. If you represent Scheme Creditors that held their shares jointly, please include the name and date of birth of each joint holder in the Voting Form. If you are an Authorised Representative for multiple Scheme Creditors who do not hold their shares jointly, please complete a separate Voting Form for each Scheme Creditor whom you represent;
3. the name of any intermediary (e.g. the broker or investment platform) through which the Scheme Creditor holds their shares in the WEIF (if applicable);
4. the Scheme Creditor’s client number with the intermediary or intermediaries through which they hold their investment in the WEIF (if applicable);
5. details of the Scheme Creditor’s shareholdings in the WEIF, including the share class(es) and number of shares for each share class that the Scheme Creditor whom you represent holds in the WEIF with each intermediary;
6. evidence that the Scheme Creditor holds their shares in the WEIF. This can be in the form of:
a. screenshots of the Scheme Creditor(s) investment account showing their name and current shareholdings in the WEIF, together with their platform and client number; or
b. a letter or statement from the Scheme Creditor’s broker/platform showing their holdings in the WEIF, together with their client number; or
c. if the Scheme Creditor is a direct investor, a screenshot or statement showing the Scheme Creditor’s name and that the Scheme Creditor is the registered holder of the number of shares indicated in this Voting Form. LFSL will verify this against the WEIF’s register of shareholders;
7. if the Scheme Creditor acquired their shareholdings in the WEIF after 3 June 2019, evidence of how they obtained those shareholdings;
8. evidence of your authority to vote for the Scheme Creditor(s) you represent. This evidence could be in the form of (amongst other things):
a. a letter of authority signed by the Scheme Creditor;
b. a copy of the power of attorney, if you hold a power of attorney for the Scheme Creditor;
c. a copy of the grant of probate or letter of administration, if you are the executor or administrator of a deceased Scheme Creditor; or
d. evidence of parental responsibility or evidence of guardianship if the Scheme Creditor is a minor.
The above list is not exhaustive.
Important note in relation to number 6 above: You only need to provide evidence of the Scheme Creditor’s shareholdings in the WEIF. You do not need to disclose any other investments which the Scheme Creditor you represent may have, outside of the WEIF.
24. I am an executor of an estate of a deceased person, can I vote? Yes, you will be able to vote by submitting the deceased’s holding details on the Portal. If you have difficulty obtaining the required information, please call the helpline on +44 20 3991 0224 (local rates apply). The Scheme Meeting to vote on the Scheme proposed by LFSL has now taken place and this helpline is now closed.
As part of filling in the Voting Form, you will need to submit evidence to confirm that you are the executor in the form of document such as a will, grant of probate or letter of administration.
25. How do I attend the Scheme Meeting if I’d like to do so? Anyone wishing to attend the Scheme Meeting must pre-register their attendance through the Voting Portal here or by phoning our helpline on +44 20 3991 0224 (local rates apply).This must be done by 5pm on 4 December 2023, if you want to attend online or via telephone; or by 5pm on 30 November 2023 if you wish to attend the Scheme Meeting in person. The Scheme Meeting to vote on the Scheme proposed by LFSL has now taken place and this helpline is now closed.
Instructions will be given as to how to vote at the Scheme Meeting, if you have not already instructed the Chair or appointed a Proxy, during the meeting itself.
26. I have a question I would like to raise at the meeting. How do I do this? Instructions on how to raise a question at the meeting will be released in due course.
27. I didn’t register or submit my vote by 5pm on 4 December 2023. Can I still attend the Scheme Meeting and submit my vote? Any vote, or registration to attend the Scheme Meeting, received after 5.00 p.m. on 4 December 2023 will not be counted or actioned, unless the Chair of the Scheme Meeting exercises their discretion to accept a late vote. However, you will still benefit from the Settlement Fund if the Scheme is implemented.
28.Can I change my voting decision? Yes, if you change your mind, the Scheme Documents request that Scheme Creditors make any changes to their voting decision up to 5pm on 4 December 2023 (“Registration Deadline”) via the voting portal. If you voted by post or email, please phone the helpline on +44 20 3991 0224 (local rates apply). The Scheme Meeting to vote on the Scheme proposed by LFSL has now taken place and this helpline is now closed.
If you have submitted a Voting Form by the Registration Deadline, but you wish to change your voting decision after the Registration Deadline, you will be able to do so up until the start of the Scheme Meeting by calling the helpline on +44 20 3991 0224 (local rates apply).The Scheme Meeting to vote on the Scheme proposed by LFSL has now taken place and this helpline is now closed.
29. I do not have internet access, how do I submit a vote? If you do not have internet access you are still able to vote
Please contact our helpline on +44 20 3991 0224 (local rates apply) and request a printed copy of the Voting Form to be posted to you. Completed Voting Forms may be posted back to LFSL at LFSL Scheme Vote, PO Box 16840, Birmingham B2 2US, and must be received no later than 5.00 p.m. on 4 December 2023. The Scheme Meeting to vote on the Scheme proposed by LFSL has now taken place and this helpline is now closed.
If you would like to attend the Scheme meeting, but only have access to a phone line please contact our helpline number on +44 20 3991 0224 (local rates apply), and they will provide guidance on how to do so. The Scheme Meeting to vote on the Scheme proposed by LFSL has now taken place and this helpline is now closed.
30.When will the result of the vote be available? The result of the vote will be announced by no later than 5pm on 15 December 2023.
31. How many votes does the Scheme need to pass? The Scheme will be approved by Scheme Creditors if:
- more Scheme Creditors vote for the Scheme than against it; and
- the Scheme Creditors voting in favour of the Scheme hold 75% or more of the amount voted.
Only the votes cast will count towards whether the Scheme has been approved or not.
32. What if I own shares in the WEIF jointly with another individual? If you own shares in the WEIF jointly, you can submit one Voting Form for the joint holding. To do this, one of you will need to act as the authorised representative and provide evidence of this. Complete section 1A of the Voting Form as the authorised representative and provide your email address, then complete Section 1B providing both your names and date of birth details. The Voting Portal includes some guidance on this. If you need help with the Voting Form, please contact LFSL via the helpline on +44 20 3991 0224 (local rates apply). The Scheme Meeting to vote on the Scheme proposed by LFSL has now taken place and this helpline is now closed.
33. My partner and I share one email address but we each hold shares in the WEIF. The portal only allows a unique email address for each Scheme Creditor voting in their own right. How do we vote? You should either submit one Voting Form via the online voting portal and a second Voting Form by email or post or alternatively both Voting Forms can be submitted by email or post. We are able to send either a soft copy by email or a printed copy of the Voting Form to you for completion. If you need a soft copy or printed version of the Voting Form please contact LFSL via the helpline on +44 20 3991 0224 (local rates apply). Voting forms can be submitted by email to lfsoa@huntswood.com or by post to LFSL Scheme Vote, PO Box 16840, Birmingham B2 2US. The Scheme Meeting to vote on the Scheme proposed by LFSL has now taken place and this helpline is now closed.
6. How much money will investors receive?
34. How will compensation be calculated? If the Scheme becomes effective every investor who holds shares in the WEIF at the time of the payment will receive a share of the Settlement Fund in proportion to the number and class of the shares they hold in the WEIF. Any investor who holds shares in the WEIF through an intermediary will receive payments from their intermediary in the same way as they have received payments in the past.
35. How much will be paid out to investors through the Scheme if it is successful? The Company estimates that the total payment to investors through the Settlement Fund will be up to £230 million. This will be distributed by the WEIF to its existing shareholders, in the same way as capital distributions have been paid since 2020 (i.e. to investors in proportion to the number and value of their shares in the WEIF). The Settlement Fund will be made up of all of LFSL’s available assets, LFSL’s remaining rights under certain insurance policies (approximately £48 million) and a voluntary contribution from its Parent company of up to £60 million.
The proposed settlement amount of up to £230 million is 77% of the figure (£298 million) that the FCA’s investigation concluded was the amount owed to investors who held shares in the WEIF at the Suspension Date. If the Settlement Fund is distributed in full, then it is estimated that investors will receive about 80% of the net asset value of the WEIF at the point of suspension taking into account what has been paid to investors to date and the most recent quarterly valuation of the remaining assets of the WEIF to be sold. It should be noted that the value of those remaining assets may increase or decrease.
LFSL has set aside a reserve (Reserve Amount) from the Settlement Fund to cover certain costs and liability contingencies. Setting a Reserve Amount means the first payments will be able to be made to investors as soon as possible. The Reserve Amount has been set prudently at £46.5 million and this amount will be reviewed on a regular basis and further distributions will be made to investors if contingencies can be released.
LFSL has made the Initial Settlement Account Distribution (as defined in the Scheme) in the amount of £185,717,355.72 to the WEIF. The WEIF will make an initial distribution of £185,717,355.72 to registered holders of shares in the WEIF on 28 March 2024. 36. How much can investors expect to receive individually from the Settlement Fund if the Scheme goes ahead? This will depend on the number and class of shares each individual investor holds. However, to provide a guide, we have set out below a table indicating the anticipated pence per share distribution to be made under the Scheme if it is approved based on two levels of possible distribution from the Settlement fund:
- in column (E), the maximum potential amount of £230 million is distributed in the event the full Reserve Amount of £46.5 million, currently set aside to cover certain cost contingencies, is released for payment;
and
- in column (D), a potential first distribution of £183.5 million (on the basis that the first distribution that is expected to be made in the second quarter of 2024 is estimated to be between £183.5 million and £200 million).
It is important to note that all figures used are by way of illustration only and may be subject to change.
Worked example:
Using the scenario of an investor (Mr. X) who holds 10,000 A Sterling Income shares in the WEIF as follows:
- If the maximum potential amount of £230 million is distributed, Mr. X, who holds 10,000 A Sterling Income shares in the WEIF, would receive a total of £515.30.
- If the first distribution in 2024 is £183.5 million, Mr. X would receive a payment of £411.10 at the time of the first distribution with the remaining balance of up to £104.20 to be paid in subsequent distributions (assuming the full Reserve Amount is released).
- These figures can be compared to the loss that the FCA claims relevant investors have suffered (the FCA Total Amount). These amounts are set out in Column (F). In the case of Mr. X, his total loss would have been £668.50. So, if Mr. X receives a total payment from the Scheme of £515.30, he would be receiving 77% of the total amount that the FCA claims he is owed.
(A) | (B) | (C) | (D) | (E) | (F) |
ISIN Number | Share Class | Settlement per share class | Pence per share – | Pence per share – | Pence per share – FCA Total Amount (£298 m) |
GB00BLRZQ406 | A Sterling Income | £540,249.47 | 4.111 | 5.153 | 6.685 |
GB00BLRZQ513 | A Sterling Accumulation | £1,193,550.01 | 5.003 | 6.271 | 8.136 |
GB00BLRZQ620 | C Sterling Income | £22,250,488.38 | 4.168 | 5.224 | 6.778 |
GB00BLRZQ737 | C Sterling Accumulation | £55,495,480.94 | 5.068 | 6.352 | 8.241 |
GB00BZ01L372 | F Sterling Accumulation | £219,970.00 | 4.005 | 5.020 | 6.513 |
GB00BLRZQC88 | Z Sterling Accumulation | £100,279,666.51 | 5.097 | 6.388 | 8.288 |
GB00BLRZQB71 | £48,928,603.44 | 4.189 | 5.251 | 6.813 | |
GB00BLRZQ950 | X Sterling Accumulation | £997,300.10 | 4.877 | 6.113 | 7.931 |
GB00BLRZQ844 | X Sterling Income | £94,691.15 | 4.012 | 5.028 | 6.524 |
The WEIF will make an initial distribution of £185,717,355.72 to registered holders of shares in the WEIF on 28 March 2024. The following table sets out the pence per share distribution for each share class to be made on 28 March 2024:
ISIN Number | Share Class | Pence per share |
GB00BLRZQ406 | A Sterling Income | 4.1606 |
GB00BLRZQ513 | A Sterling Accumulation | 5.0634 |
GB00BLRZQ620 | C Sterling Income | 4.2183 |
GB00BLRZQ737 | C Sterling Accumulation | 5.1290 |
GB00BZ01L372 | F Sterling Accumulation | 4.0538 |
GB00BLRZQB71 | 4.2399 | |
GB00BLRZQC88 | Z Sterling Accumulation | 5.1581 |
GB00BLRZQ844 | X Sterling Income | 4.0602 |
GB00BLRZQ950 | X Sterling Accumulation | 4.9361 |
The Scheme is facilitating additional money to be distributed to investors over and above the sale of the remaining assets in the WEIF. Any money raised through the sale of the remaining WEIF assets will continue to be paid out to investors in the same way as they are currently, regardless of whether or not the Scheme becomes effective.
7. The role of the Investors' Committee and Investor Advocate
The Investors’ Committee is chaired by Jamie Drummond Smith, an experienced financial services sector professional. He is independent of LFSL and the Parent and does not work for and has never worked for LFSL or the Parent. Mr Drummond-Smith appointed Freshfields Bruckhaus Deringer LLP, a well-known London based law firm, to advise him and the Investors’ Committee in relation to the Scheme.
Watch Jamie discussing the Scheme and the Committee’s conclusion that it offers a better outcome than the alternatives and that the Committee supports it here.
38. What are the views of the Investors’ Committee on the Scheme? The Chairman of the Investors’ Committee provided a report on the views of the Investors’ Committee in respect of the Scheme on 5 October 2023, which can be found here.
39. What is the role of the Investor Advocate? The Investor Advocate is Joe Bannister, who has been appointed to assist Scheme Creditors in respect of the Scheme. Mr. Bannister is an experienced lawyer. He is independent of LFSL and the Parent and does not work for and has never worked for LFSL or the Parent. Mr. Bannister is a partner at DAC Beachcroft, a London based law firm with particular expertise in financial services regulatory matters. Mr. Bannister will be supported where appropriate by other members of DAC Beachcroft.
The Investor Advocate can answer general questions that you may have about the Scheme. He will also take your feedback on the Scheme and discuss it with us. There will be no charge to investors for this. He will report the feedback he receives from investors to the Court. The Investor Advocate’s report can be found here.
Please note the Investor Advocate cannot answer questions about someone’s individual investments.
6. Other Questions
40. I have forgotten my password to view correspondence in my investment account with my broker or platform. Please contact your broker or platform and ask them how to access your investment account.
41. I have received correspondence but my details are incorrect. What should I do? If you invested in the WEIF through an intermediary, broker or platform please contact them and ask them to update your details. If you invested in the WEIF directly please contact us using the details provided here so that we can update our records.
42. I am an executor of an estate or the relative of a deceased person who was invested in the WEIF as at 3 June 2019. What should I do? If they invested in the WEIF through an intermediary, broker or platform, please contact that intermediary to inform them about this. If they invested in the WEIF directly please contact us using the details provided here so that we can update our records.
43. What if a claims management company or legal firm has contacted me to offer help with my claim? We have made the process for receiving payments as simple as possible. A person entitled to receive a payment from the Settlement Fund will receive that payment without making a claim or completing any paperwork. Payments will be made as they are made now. You should also be aware that claims management companies and legal firms may charge for any compensation paid.
44. How will payments under the Scheme be treated for tax purposes?
LFSL’s expectation is that payments made by WEIF to investors under the Scheme will be treated as capital distributions from the Fund. As such, each distribution will be deemed to be a part-disposal of your shares in the Fund for UK capital gains tax purposes and may, depending on your personal circumstances, give rise to a capital gains tax liability on any gain or give rise to a tax loss. The WEIF should remain a qualifying investment for the purposes of ISAs and SIPPs, such that this should not impact the tax treatment of the distribution. However, LFSL is not able to provide tax or investment advice to individual investors, and any Scheme Creditor who is unsure of how payments will be treated should seek independent advice.
8. How to obtain further information
45. What is the best way to keep updated about the Scheme? The best way to keep updated about the Scheme is to check for updates on this website.
46. How will I be contacted through this process? You may be contacted through the platform, broker or intermediary that you originally invested through (unless you are a direct investor in which case you will be contacted by LFSL directly). However, we encourage you to regularly check this website for the very latest updates.
It is important to note that investors will not be approached by LFSL or anyone acting for LFSL to assist them in making a claim in the Scheme. Please beware of scams and do not give details of a claim or any personal information or bank account details to anyone who claims that they work for LFSL or on our behalf. A person entitled to receive a payment from the Settlement Fund will receive that payment without making a claim or completing any paperwork. Payments will be made as they are made now.
47. I’m an investor, but I haven’t heard anything from my platform, what should I do? Please contact your platform or broker’s customer service team to enquire about communications from LFSL regarding the WEIF and the proposed Scheme. We also encourage you to check this website regularly.
48. Where can I go for help/ get further information? The website will be updated with further information as we move through the Scheme process. Scheme Creditors can also contact LFSL and/or the Investor Advocate using the details below:
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