Q&As about Lifemark SA

Lifemark SA is a company established in Luxembourg whose bonds were distributed in the UK by Keydata. These bonds have previously been categorised as Category Two, Category Three and Category Five products, and include investments promoted by Keydata with names such as the Defined Income Plan, Secure Income Plan and Income Plan. You can find the full list of products included in Categories Two, Three and Five on Keydata's Administrators’ (PwC) website.


  1. What is Lifemark SA?
  2. Why have I stopped receiving income in respect of my Lifemark SA investment?
  3. What is the FSCS’s involvement?
  4. When will the FSCS start dealing with these claims?
  5. I have not yet received an FSCS application form in respect of my Lifemark-backed investment sold to me by Keydata; what should I do?
  6. How long will it take the FSCS to reach a decision on my claim?
  7. If my claim is accepted by the FSCS, how will the compensation be calculated?
  8. Will investors that were expecting income payments from those investments receive them in compensation?
  9. Will investors with Lifemark backed investments in an ISA wrapper be able to keep their ISA status?
  10. The FSCS previously dealt with my ‘Category Two’ ISA claim in respect of tax losses; do I need to submit another claim for compensation?
  11. When the FSCS considers claims will it be distinguishing between investments held in an ISA wrapper and direct investments?
  12. What if I believe I am suffering financial hardship and need my claim to be considered urgently?
  13. What is the level of protection provided by the FSCS?
  14. Who is eligible for protection under the FSCS?
  15. If I am paid compensation, is it correct that my legal rights are assigned to the FSCS?
  16. What can I do if my losses exceed £48,000?
  17. I have previously been paid compensation by the FSCS in respect of another claim against Keydata. I accepted the payment “in full and final settlement” of my claim; does that mean I cannot make a further claim against Keydata?
  18. Where can I obtain further information regarding Keydata?

1. What is Lifemark SA?

Lifemark SA is a company established in Luxembourg whose bonds were distributed in the UK by Keydata. These bonds have previously been categorised as Category Two, Category Three and Category Five products, and include investments promoted by Keydata with names such as the Defined Income Plan, Secure Income Plan and Income Plan. You can find the full list of products included in Categories Two, Three and Five on Keydata's Administrators’ (PwC) website.

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2. Why have I stopped receiving income in respect of my Lifemark SA investment?

On 1 February 2010, Luxembourg’s financial services regulator, the Commission de Surveillance du Secteur Financier (CSSF), suspended the securities issued by Lifemark SA from trading on the Luxembourg Stock Exchange. The CSSF announced at the same time that it was considering a proposal from Lifemark SA to restructure its debt.

Lifemark SA has since confirmed that it has failed to pay income on a number of its bonds. This means that certain Keydata investors in Lifemark-backed bonds have not received the regular income payments that they expected to receive from their investments.

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3. What is the FSCS’s involvement?

The FSCS has carried out detailed investigations to learn more about the way in which Keydata promoted the Lifemark-backed bonds, and the products themselves, and what role we may play in compensating investors for any losses.

We are satisfied that the marketing materials produced by Keydata to promote the products did not comply with the Financial Conduct 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.

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4. When will the FSCS start dealing with these claims?

The FSCS sent application forms to investors in the Lifemark SA backed Keydata products during October 2010. Once application forms have been returned, we will assess each claim to establish whether the investor is eligible for compensation under our rules and inform investors accordingly.

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5. I have not yet received an FSCS application form in respect of my Lifemark-backed investment sold to me by Keydata; what should I do?

If you have not yet received an application form, you should contact our Customer Services Team on 0800 678 1100 or 0207 741 4100. You can also email us at enquiries@fscs.org.uk.

In the case of investments made through a SIPP, we have been liaising with the relevant SIPP trustees regarding the issuance of application forms. Accordingly, you may also want to contact your SIPP trustee to ask about the current position.

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6. How long will it take the FSCS to reach a decision on my claim?

Once an application form has been returned, we will aim to process it within six months. We will assess it to confirm whether it is eligible for compensation under our rules. Claims will be handled on a case by case basis.

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7. If my claim is accepted by the FSCS, how will the compensation be calculated?

The FSCS has completed its investigations into the valuation of the Lifemark bonds. We are now satisfied that these bonds have no value for FSCS in quantifying the claims of individual Lifemark investors. Compensation payable to eligible investors will not, therefore, be reduced to take account of an amount representing a value for the bonds.

This means that the FSCS can now quantify claims and pay compensation to those investors who are eligible under our rules, subject to the compensation limit. The limit for investment claims against Keydata is £48,000 (100% of the first £30,000 of financial loss suffered and 90% of the next £20,000, per person).

We will compensate for the amount you invested less any amount you have received to date in relation to your investment (e.g. income payments or any other amounts received).

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8. Will investors that were expecting income payments from those investments receive them in compensation?

No. The FSCS is not permitted to pay compensation for failure of investment performance (including income payments on bonds) to match a guarantee or representation made. Accordingly, the FSCS will not compensate purely for the failure to make the missed income payments.

The FSCS can only pay claims where an actual financial loss has been suffered by an investor.

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9. Will investors with Lifemark backed investments in an ISA wrapper be able to keep their ISA status?

Under the previous Government investors who had lost capital were allowed to regain their ISA tax exemptions by replacing capital with a new ISA manager. However, the legislation that was introduced to allow that to happen does not cover the Lifemark situation. We understand that HMRC is currently considering whether it will be possible to introduce new legislation to allow Lifemark investors to place their FSCS compensation with a new ISA manager.

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10. The FSCS previously dealt with my ‘Category Two’ ISA claim in respect of tax losses; do I need to submit another claim for compensation?

Yes. Claims for tax liabilities are entirely separate from the claims which we are now inviting, which relate to capital losses in respect of investments backed by Lifemark SA. A decision on a ‘Category Two’ tax claims has no direct bearing on the decision we will reach on any additional claim against Keydata you may have.

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11. When the FSCS considers claims will it be distinguishing between investments held in an ISA wrapper and direct investments?

No. Whether or not a Lifemark SA backed investment was held in an ISA wrapper has no direct bearing on claims.

 

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12. What if I believe I am suffering financial hardship and need my claim to be considered urgently?

Once a claim has been made to the FSCS, if any claimants believe that the FSCS should treat their case as a priority because they are facing immediate financial hardship, they should let the FSCS know as soon as possible. Where there is immediate financial hardship, we will do what we can to accelerate the handling of the claim.

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13. What is the level of protection provided by the FSCS?

For claims against Keydata relating to Investment business, the FSCS can pay compensation to eligible claimants up to a maximum of £48,000 (100% of the first £30,000 and 90% of the next £20,000) per person.

If an individual has more than one type of claim against Keydata, the limit applies to the individual’s overall claim (i.e. all claims combined).

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14. Who is eligible for protection under the FSCS?

The FSCS’s protection is governed by the FCA’s Compensation (COMP) Rules, located in the Redress section of the FCA’s Handbook. The COMP Rules set out who is eligible to benefit from the protection provided by the FSCS.

For example, generally speaking, we can only accept claims from individuals and small companies. Overseas financial services institutions and large companies are excluded.

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15. If I am paid compensation, is it correct that my legal rights are assigned to the FSCS?

Yes, under the statute and rules by which we operate and the terms of the FSCS's application form, on the payment of compensation, investors are typically required to transfer or assign to the FSCS their legal rights in their entirety against the firm in default and/or any relevant third parties. In other words, the FSCS then "stands in the shoes" of the investors. Relying on such rights, the FSCS seeks to recover all or part of the cost of compensation. Such recoveries are used to mitigate the cost of levies on financial services firms, which are raised to fund the operation of the FSCS and the payment of compensation.

To the extent that the amount recovered in relation to an individual claim exceeds the amount paid in compensation, after costs of recovery, the FSCS forwards the recovery to the investor.

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16. What can I do if my losses exceed £48,000?

If you wish to pursue a claim yourself against parties other than Keydata, you should write to us. You should confirm why you would like to retain your rights and which party/parties you intend to take action against. In the event we accept your claim, we will confirm at the time if we agree to your request. In the meantime you should still complete our application form in full, to ensure the processing of your claim is not delayed.

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17. I have previously been paid compensation by the FSCS in respect of another claim against Keydata. I accepted the payment “in full and final settlement” of my claim; does that mean I cannot make a further claim against Keydata?

No. The previous offer of compensation was made in ‘full and final settlement’ of that particular type of claim against Keydata. A claim for lost capital in respect of a Lifemark backed product (for which we are now sending out application forms) is a separate type of claim against Keydata which the FSCS has not previously considered.

However, please note that when calculating compensation, we take into account all your claims against Keydata up to the compensation limit of £48,000 (i.e. for firms declared in default prior to 1 January 2010, under our rules, the FSCS can pay compensation to eligible claimants of up to a maximum of £48,000, based on 100% of the first £30,000 and 90% of the next £20,000, per person).

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18. Where can I obtain further information regarding Keydata?

If you have any queries regarding the FSCS you can contact our Customer Services Team on 0800 678 1100 or 0207 741 4100. You can also email us at enquiries@fscs.org.uk.

The Administrators’ website provides general information about their work: www.pwc.co.uk/KIS.

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Jargon Buster

Eligible

qualifying for compensation under Scheme rules.

FCA

The Financial Conduct Authority is the UK's regulator for the financial services industry. 

In default

A firm unable, or likely to be unable to pay claims against it. This will generally be because it has stopped trading and has insufficient assets to meet claims, or is in insolvency.

Investment

a financial product in which money can be invested to earn interest or profit (although the value of investments can go down as well as up).