Compensation claims ruled out for Lehman-backed products
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Investors in capital-at-risk products from NDF Administration, Defined Returns Limited and Arc Capital and Income will not be able claim compensation from the Financial Services Compensation Scheme.
The FSCS says that following a review, it is satisfied that the relevant marketing materials provided had adequate and appropriate warnings that there was a risk to investors’ capital if the organisation backing the investments failed.
Products at risk included the NDF fixed income and growth February 2008, NDF fixed income plan June 2008, DRL kick-out performance plan issue 1, Arc fixed income plan 6 and Arc stepped kickout plan 5.
The FSCS says investors will not have claims arising from the materials and that it will not send application forms to all known investors with capital at risk products.
The FSCS says: “If any investor wishes to submit a claim to us, for any specific other reason, they can do so by contacting us to request an application form. We will assess claims for compensation on a case-bycase basis.
“However, we can only accept a claim where a claimant can demonstrate to us that a legal liability is owed to him or her by one of the firms in default.”
The decision comes more than 10 months after the companies failed due to their exposure to Lehman Brothers.
In March, the FSCS announced a £22m levy on intermediaries to cover losses from some other products from NDFA, DRL and Arc. This was in addition to the £58m levy charged to cover client losses from the Keydata collapse.
Lowes Financial Management managing director Ian Lowes says: “It is no surprise this was the verdict as it was clear these products were capital at risk.”
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Readers' comments (1)
Anonymous | 7 Oct 2010 4:52 pm
This disgraceful verdict from the FSCS comes after more than a year of deliberating, during which it continuously claimed that the issues were 'complicated'. For Mr Lowes to make such an arbitary statement when thousands of ordinary and mostly cautious savers have been duped into losing their savings by the sharp marketing practices of firms such as NDFA and others is quite irksome. The fact is that nothing in the NDFA brochures disclosed anywhere the name Lehmans as an underwriter of any of its products. Savers were told the ONLY way they would lose any capital was if there were a collapse in the stock market, and that in any event the whole thing had the FSCS safety net. Yet the FSCS conclude savers were adequately warned ! Ridiculous.
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