The thousands of investors who lost fortunes when investment firm Keydata went into administration have been told that they will receive compensation for their losses.
The Financial Services Compensation Scheme (FSCS) has been looking at the case for Keydata investors since February 2010. The FSCS will send compensation claim forms to investors in October so that payouts can begin.
Keydata – what happened?
Keydata was placed into administration in 2009, when the financial regulator, the Financial Services Authority (FSA), said that the company had broken tax rules and was declared insolvent. Almost 30,000 investors lost £450m when the firm failed.
The firm provided a range of services, from administration and distribution of complex investment vehicles structured products, venture capital trusts and life settlement plans. It initially fell foul of the regulator when it described its complicated products as simple investment ISAs.
Keydata problems unfold
However, its real problems came from the sales of life settlement plans, originating from two firms, SLS and Lifemark, both based in Luxembourg.
It transpired that 5,500 investors in SLS saw £103m of investment disappear through a major fraud, and that Lifemark could not sustain the payouts on the bonds that they issued. SLS investors have already received around £42m in compensation from the FSCS.
What does the new FSCS announcement mean for Keydata investors?
The latest announcement from the FSCS confirms that consumers invested in Lifemark products, through Keydata, will be entitled to compensation.
The products affected 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.
Compensation levels are limited to £48,000, equivalent to 100% compensation on the first £30,000 of investment and 90% on the remaining £20,000 of the overall £50,000 limit.
If you have been affected by the Keydata collapse, you can get more information from the FSCS website. Accountancy firm Pricewaterhousecoopers has additional information on its website.
Which? Money when you need it
You can follow @WhichMoney on Twitter to keep up-to-date with our Best Rates and Recommended Provider product and service reviews.
Sign up for the latest money news, best rates and recommended providers in your newsletter every Friday.
Or for money-saving tips, and news of how what’s going on in the world of finance affects you, join Melanie Dowding and James Daley for the Which? Money weekly money podcast
For daily consumer news, subscribe to the Which? news RSS feed here. And to find out how we work for you on money issues, visit our personal finance campaigns pages.