Keydata Update

The FSCS expects to be able to compensate eligible Lifemark investors

This update is for customers of Keydata who hold investments backed by Lifemark SA, a company established in Luxembourg whose bonds were distributed in the UK by Keydata.

Following our investigations to learn more about the way in which Keydata promoted the Lifemark-backed bonds, and the products themselves, investors will be pleased to know that we expect to be able to compensate eligible claimants. We will be sending application forms to customers of Keydata who hold these investments.

We are satisfied that the marketing materials produced by Keydata to promote the products did not comply with the Financial Services Authority’s rules.  This means that Keydata may owe a legal liability to investors in these products, allowing us to pay compensation to anyone who is eligible under the FSCS’s compensation rules.

The products affected by this announcement include the Defined Income Plan issues 1-8, the Income Plan issues 1-14, the Secure Income Bond issue 4 and the Secure Income Plan 1-14. Full details of all the affected products are available on the administrators’ website.

The Luxembourg based administrator of Lifemark SA has been considering  proposals to restructure Lifemark SA. There is still uncertainty over the ongoing restructuring proposals and what the implications will be for investors. As a result, the value attributable to the individual Lifemark bonds is also uncertain which means that we cannot yet confirm how much each investor has lost and therefore what compensation we can pay.

However, the FSCS has decided that this continued uncertainty should not stand in the way of commencing the compensation claim process. Therefore, we will send application forms to investors in these products during October so that, once the restructuring position is clearer, we can commence compensating investors without delay. In the meantime, once application forms have been returned to the FSCS, we will assess each claim to establish whether the investor is eligible for compensation under our rules and inform them accordingly.

We hope to be in a position to provide a further update about the calculation and payment of compensation by the end of October.

The FSCS fully recognises the concerns of investors who have faced extended uncertainty about their investments. Despite the complexity, we have sought to move the compensation process forward as quickly as we can and will continue to do so.

More information

By Thomas Chen
28 September 2010