Thousands of Tesco shareholders are entitled to compensation following a misleading profit statement – but you only have until 22nd February 2018 to make a claim.
The retail giant overestimated its profits by hundreds of millions in a statement published in August 2014.
After complaints were made to the FCA, around 10,000 shareholders could now be entitled to compensation. But they must make a claim before the deadline – which is just two months away.
Which? takes a look at how much shareholders could be owed and how to make a claim.
Why is Tesco paying compensation?
In a statement published on 29 August 2014, Tesco forecast its expected profits at around £1.1bn for the first six months of the year.
But on 22nd September 2014, Tesco announced this figure was inaccurate, with profits overestimated by £326 million for the period.
The Financial Conduct Authority (FCA) found that Tesco should have been aware of the error and ordered the retailer to compensate investors who may have been affected by the misleading figures.
Tesco officially opened an £85 million compensation scheme in August last year to reimburse investors who may have experienced loss.
- Find out more: your rights as an investor.
How much compensation is available?
Those affected by the Tesco blunder are entitled to compensation of 24.5p per share purchased, plus interest of 4% for retail investors and 1.25% for institutional investors.
Varying amounts will be paid for the Tesco bonds affected.
Hargreaves Lansdown estimates that the average claim will come to around £400.
If the affected shares were held within an Isa, compensation can be paid directly into that Isa account and will not count towards the investor’s annual allowance.
For Sipp investments, compensation can be paid directly into a Sipps account and will not count towards the investor’s annual pension allowance.
- Find out more: how to choose the best stocks and shares Isa.
Who is eligible to make a claim?
If you are a ‘net purchaser’ – someone who bought Tesco shares or certain Tesco bonds between 29th August 2014 and 19th September 2014 – you might be able to claim compensation.
The scheme only compensates shareholders who suffered genuine economic loss due to Tesco’s misleading profits statement.
This means that if you experienced loss due to unrelated investment activity – such as hedging, for example – you may not be eligible for compensation under the scheme.
KPMG, who has been appointed as the administrator for compensation, will aim to deal with each claim within 35 days.
- Find out more: types of investment.
How do I claim?
In order to make a claim you will need to provide copies of the following documentation:-
- Proof of identification if you are an individual or the authourised signatory list if you are claiming on behalf of an entity
- A copy of a bank statement for the bank account to which you would like the payment to be made
- Evidence of transactions such as a broker statement, exchange report or physical share certificate
Remember, if you choose to post your claim form, be sure to send it with enough time to be received by the 22nd February deadline
Further details about the claims process can be found on the compensation scheme website or by calling the helpline on 0808 164 6031.
Can Tesco employees make a claim?
Tesco have developed a separate process,with Equiniti, for employees that purchased shares through the company’s Buy as You Earn (BAYE) scheme between 29th August 2014 and 19th September 2014.
If you are or were employed by Tesco during this period, you will be eligible for a claim.
Equiniti will have notified affected employees by letter but if you have not received one or no longer work at Tesco, give them a call on 0333 207 6375 to check the status of your claim.
Due to the restricted number of shares that can be purchased through the BAYE scheme for that time, the maximum claim amount per person is £11.76.
For more information and useful tips on how to invest and building a portfolio, check out our comprehensive investment guide.
Updated: 9th January 2018 (16:20) to include information about employee compensation claims.