A lawyer for a group opposing the compensation proposal at a final High Court "sanction hearing" said it had been misrepresented, would block retail investors from the protection of statutory redress routes and only returned 4-6 pence in the pound for some.

"This is of enormous public importance," Damian Falkowski, representing the Woodford Campaign Group and the Transparency Task Force, which seeks greater transparency in financial services, told the first day of a two-day hearing.

"In my submission, it is obvious that any consumer would want to avail themselves of the jurisdiction of FOS (Financial Ombudsman Service)."

The redress proposal by Link Fund Solutions (LFS), the former authorised corporate director of the Woodford fund, will block investors from seeking redress via the FOS or up to 85,000 pounds from the Financial Services Compensation Scheme (FSCS), the fund of last resort when regulated businesses fail.

The Woodford Equity Income Fund was suspended in 2019 after outsized bets on illiquid assets, trapping 300,000 investors, sparking a Financial Conduct Authority (FCA) inquiry and three lawsuits against LFS and one against Hargreaves Lansdown, an investment platform that promoted the fund.

AGGRIEVED

Thousands of investors last month overwhelmingly backed the LFS redress plan. But only 54,000 investors voted.

Felicity Toube, a lawyer for LFS, told the court that the low turnout was not unusual and that the company had gone "above and beyond" to advertise and publicise the scheme.

"No doubt they (opposing investors) feel aggrieved ... and will say it is unfair they are required to abide by the rule of the majority," she said.

Cliff Weight, a director of shareholder advisory group ShareSoc that represents retail investors, told the court that the "woeful" compensation plan fell short of even the FCA's original calculation of harm of 298 million pounds.

He suggested the court could help beef up redress by requesting an FCA restitution order against Woodford Investment Management, the firm controlled by Woodford and his business partner Craig Newman, if it approves the scheme.

Reuters was unable to reach Woodford or Newman.

The FCA has said LFS made "critical mistakes and errors" in how it oversaw the Woodford Equity Income Fund's liquidity risk management and controls. But it has advised shareholders to accept the scheme to avoid lengthy and costly court battles.

LFS, which denies liability, says investors will receive 183.5 million pounds this quarter if the scheme is approved. If the settlement is rejected, it has vowed to fight litigation and challenge any FCA case.

($1 = 0.7887 pounds)

(Reporting by Kirstin Ridley; Editing by Susan Fenton)

By Kirstin Ridley