FSCS to start paying some structured product claims
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The Financial Services Compensation Scheme will now start paying eligible claims that it receives against NDF Administration, Defined Returns Limited and Arc Capital and Income relating to the structured products they sold.
The FSCS has identified two broad categories of products for the three firms; capital secure products and capital at risk products.
Its investigations indicate that capital secure products may have been mis-sold by NDF, DRL and Arc. The investments categorised as capital secure products include:
NDF - Capital Secure Fixed Growth Plan March 2008
NDF - Capital Secure Fixed Growth Plan April 2008
NDF - Capital Secure Fixed Growth Plan June 2008
DRL - Enhanced Returns Plan Issue 1
DRL - Enhanced Returns Plan Issue 2
DRL - Enhanced Returns Plan Issue 3
DRL - Enhanced Returns Plan Issue 4
DRL - Enhanced Emerging Markets Plan Issue 1
DRL - Enhanced Returns Plan Issue 5
Arc - Bull & Bear Enhanced Investment Plan 3
The FSCS will be sending application forms to around 1,700 investors with these products by the end of December. It aims to pay the majority of eligible claims within six months of receiving an application form and supporting information.
It is still investigating the position of investors who hold capital at risk products. It has not yet confirmed whether these products are likely to give rise to valid claims for compensation.
The investments defined as capital at risk products include:
NDF - Fixed Income or Growth Plan February 2008
NDF - Fixed Income Plan June 2008
DRL - Kick Out Performance Plan Issue 1
Arc - Fixed Income Plan 6
Arc - Stepped Kick Out Plan 5
FSCS chief executive Loretta Minghella says: “We are pleased to say that we are now able to send application forms to investors with capital secure products and will start making payments to eligible claimants as soon as the application forms are returned to us. Meanwhile, we are doing everything we can to complete our investigations into the capital at risk products as quickly as possible.”
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Readers' comments (3)
Anonymous | 12 Dec 2009 8:27 am
My wife’s particular Plan NDF - Fixed Income Plan June 08 is virtually identical to the NDF - Capital Secure Fixed Growth Plan June 08 which the FSCS call Capital Secure. The terms and conditions are exactly the same. The only difference between the Plans is that investors in the Fixed Income Plan June 2008 could lose some capital if the FTSE 100 or Dow Jones Eurostoxx 50 indices should fall below 50% of their values at the start of the investment and of course this has not happened.
I have the following written statements with respect to my wife’s investment:
· “At maturity, the investment guarantees to return the original capital”.
· “If either index falls by more than 50% from its initial index level at any point during the term but closes on 16th August 2013 equal to or above the initial index level, then your Capital will be fully repaid”
· “Investments are authorised under the Financial Services and Markets Act 2000 and are therefore covered by the Financial Services Compensation Scheme. As such, in the event that the Provider defaults, the investor is protected for 100% of the first £30,000 and 90% of the next £20,000”.
The provider has now defaulted and the FSCS is now considering if liabilities exist with respect to the Plan despite the above statements being given to us both verbally and in writing.
We feel as the provider of the NDFA Fixed Income Plan June 08 has been declared as being in default and we have been equally mis-sold the product as those investing in so called Capital Secure products, that these products should be treated in the same manner.
I fear that there is a danger that the FSCS will put out a different interpretation of different Plans with the same Terms and Conditions and leave some pensioners in the lurch.
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james byles | 4 Jan 2010 4:31 pm
It really is outrageous that the FSCS are making ANY distinction whatseover between the plans...ALL of them were mis-sold!!
The fact remains that Lehman Bros was not a stable organisation and should not have been allowed to offer any products to the market, it was being rated at AAA+ right up to the point it went under...the fact that DRL et al were then selling these prodcuts at all is reason enough to compensate ALL investors not just those listed as Capitla Secure.....We have ALL been conned and the FSCS should do the right thing immediately....irrespective of what bracket THEY have put the individaul investments into
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Anonymous | 4 Jan 2010 4:45 pm
i am also a holder of NDFA fixed income plan 2008. When i took out this plan, i was under the impression that the only risk was with the two stock markets. I was not informed that the money would be placed outside the british banking system and would not be covered by the FSCS. The literature used to sell this product focused on the risk to the two indices and nothing else. The two indices have not fallen to the level where i would have started to lose capital, and yet i have lost all my money. I feel i have been missold this product by NDFA deliberately leaving out vital information.
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