* Lawmaker to call for judge-led inquiry - draft letter

* Redress scheme 'woefully inadequate' -investor group ShareSoc Proposal reflects breaches of rules, not losses - FCA

* Investor vote on redress plan closes on Dec. 4

* Outcome expected on Dec. 15

LONDON, Nov 22 (Reuters) - Around 400 investors have signed a British lawmaker's letter calling for a judge-led inquiry into how the Financial Conduct Authority (FCA) handled the multi-billion pound collapse of a fund run by former star stockpicker Neil Woodford.

Ten days before voting closes on a proposed redress scheme, that could cap damages below 200 million pounds ($250 million), the chair of an all-party parliamentary group (APPG) is urging the government to step in, a draft letter seen by Reuters shows.

The FCA has urged investors to seriously consider accepting the offer after the failure of the LF Woodford Equity Income Fund, that was valued around 3.65 billion pounds at its collapse in 2019 following out-sized bets on illiquid assets.

But Bob Blackman, chair of the APPG on banking and fairer financial services, accuses the FCA of understating investor losses, misrepresenting the value of the redress scheme, acting inappropriately by endorsing it and failing investors by not fully publishing its own investigation into the scandal.

Blackman is calling for a meeting with City Minister Bim Afolami, who is responsible for financial services, to discuss "misconduct and regulatory failures". He wants to make the case for an independent inquiry "in due course", the draft letter shows.

"Inevitably ... the message gets out that the UK financial system is a 'caveat emptor' market in which negligence and dishonesty go unchallenged by a complacent or even complicit regulator, and there is no route to redress for innocent victims," it says. The final wording could change.

LOW-BALL SCHEME?

The failure of the fund sparked political and public outcry, an FCA inquiry and three investor lawsuits against Link Fund Solutions (LFS), once the fund's authorised corporate director.

About 300,000 investors have been offered the LFS redress scheme that could see damages set around 180 million pounds after costs, liabilities and expenses - a fraction of the 1 billion pound-plus redress suggested by some investors and law firms, court filings show.

Investor group ShareSoc has labelled the proposal "woefully inadequate". The FCA rejects allegations it is backing a low-ball scheme.

"The proposed redress reflects the loss caused by LFS' failure to comply (with) the FCA's principles," a spokesperson said. "It does not, nor is it intended to, reflect any losses caused by a deterioration in the performance of the underlying investments in the fund."

If the proposal is approved, investors in the fund at its suspension will be barred from seeking compensation of up to 85,000 pounds from the Financial Services Compensation Scheme (FSCS), the fund of last resort when regulated British firms fail, or from further legal action, court filings show.

LFS proposed the scheme after a four-year FCA investigation into the Woodford fund. In draft findings, the FCA said LFS had made "critical mistakes and errors", ordered a 300 million pound compensation fund and a 50 million pound fine.

The outcome of the vote is expected to be announced on Dec. 15. If it is approved, a judge will make a final ruling on its fairness at a hearing in January. ($1 = 0.8025 pounds) (Editing by Sinead Cruise and Emelia Sithole-Matarise)