Investors currently stuck in Neil Woodford's LF Woodford Equity Income fund (WEIF) with Hargreaves Lansdown (HL) will be able to transfer their holdings to a rival investment platform, Link Fund Solutions has confirmed.
The decision comes after interactive investor CEO Richard Wilson wrote a letter to the Treasury Select Committee on Tuesday (9 July) criticising Link, WEIF's authorised corporate director, for rejecting HL customers' attempts to switch.
Wilson said he believed the issue concerned those investors holding the ‘Z' share class of WEIF, which was exclusively available on HL's platform. HL was the only investment platform that managed to negotiate a fee discount from Woodford Investment Management, with its rivals offering customers the ‘C' share class.
It was a decision he said "appears to have no sound rationale or practical operational basis".
WEIF has been gated since 3 June due to liquidity problems, with Link announcing last week it would be suspended indefinitely.
A spokesperson for Link said Financial Conduct Authority regulations that barred dealing in the fund during its suspension placed "significant obstacles to enabling a customer to move from one investment platform to another where it would mean a change of share class".
However, on Wednesday (10 July) the spokesperson added: "Link Fund Solutions had already enabled investors to transfer between platforms when no such change in share class is needed.
"After lengthy discussion with Woodford, transfers between platforms across all share classes, but not share class conversions, will now be allowed with immediate effect."
The spokesperson added that the decision "supports investors by providing them with the freedom to move their investments between platforms".
Laura Suter, personal finance analyst at rival platform AJ Bell, said the fact that transfers to other platforms were being delayed "due to a technical share class issue was particularly annoying for investors wanting to move their money out".
"At such a stressful time for investors, [Link's decision to allow transfers] should help to ease at least some of their frustrations," she added.
interactive investor criticism
Wilson had on Tuesday written to the inquiry into the Woodford scandal claiming his firm had heard from investors that had "inexplicably" being denied the chance to switch their investment to a rival platform.
Wilson said: "Currently, investors who hold [WEIF] have both hands tied behind their back - they can neither exit the fund, nor transfer their assets to platforms which might better suit their needs. At what is already a difficult time for these investors, we think this is unacceptable."
Wilson claimed that "Link's decision appears to have no sound rationale or practical operational basis".
"Even where a change in share class is required to effect the transfer, we believe this is a simple record-keeping matter," he said.
"It does not require the fund to dispose of any of its underlying portfolio of investments, meaning liquidity cannot be the reason for such restriction."
Wilson added the decision "has a detrimental effect on choice and competition".
He also re-iterated his call for regulator the Financial Conduct Authority to ban platform exit fees outright, "and not just for new business going forward".
"We think this is important because exit fees 'lock-in' customers to services that may not be cost effective or adequately serve their needs.
"In the Woodford context, it means that not only are customers facing inconvenience and detriment, to add insult to injury, they have been held hostage by exit fees, too. Quite shocking."
Both HL and Link have been criticised for their roles in the episode, alongside many other related parties. At the weekend, Nick Train, manager of the Lindsell Train UK Equity fund, said the fallout had been "damaging to the whole active management industry".
Others have said similar in the past, with a number telling Investment Week they worried about the ramifications it would have on active management.