Rockingham Independent clients who invested in a troubled Luxembourg-based life settlement vehicle will not receive compensation for their losses from the Financial Services Compensation Scheme.
ARM Asset Backed Securities issued bonds based on life settlement policies without the appropriate permissions which were sold to investors in the UK and Europe.
Of the 2,000 UK investors that invested a total of £75m into ARM, at least 200 sales were advised by Rockingham.
Rockingham was placed into liquidation on 30 March. As ARM is not authorised by the FSA, investors are not covered by the FSCS but they can still bring claims against the adviser who recommended the bonds.
In an update for Rockingham customers, published last week, the FSCS says: “While we accept Rockingham may potentially have given bad investment advice to some investors in respect of ARM investments, we do not consider such advice can properly be said to have caused the losses which investors may have suffered.”
It goes on to explain it believes the legal cause of investor losses was the decision of the Luxembourg regulator to reject ARM’s application for authorisation.
The FSA fined Rockingham £35,000 in September 2011 and imposed partial bans on its directors over sales of ARM bonds and unregulated collective investment schemes.
Thameside Wealth director Tom Kean says: “This decision by the FSCS goes against all logical thinking and leaves the already confused investing public even less sure of how the compensation scheme works.”