Up to 70 investors in ARM Asset Backed Securities may now be able to seek compensation for bad financial advice after the Financial Services Compensation Scheme agreed to reconsider their cases.
The FSCS said in 2013 that investors could not seek compensation over their purchase of ARM bonds, declaring that advisers representing Rockingham Independent were only liable under limited circumstances.
However, the lifeboat fund has now identified 70 claims which show evidence that Rockingham, which was declared in default in 2012, failed to act on information it had about the authorisation status of ARM.
The ARM Bonds were distributed in the UK by Catalyst Investment Group, which sold them via a number of advisers including Rockingham.
Out of the 2,000 UK investors that invested a total of £75m into ARM, at least 200 sales were advised by Rockingham.
The FSCS initially found that investor losses were causes by a decision from the Luxembourg regulator to reject ARM’s application for authorisation, which Rockingham was not legally responsible for warning investors about.
As a result, it said that investors would not be able to pursue compensation.
The FSCS will write to all potential claimants to inform them of the decision, while those who remain unaffected will also be told that there is insufficient evidence to support their claim.
Claimants who have already been compensated up to the FSCS’ investment limit of £50,000 from a successful claim against Catalyst will not have their cases reassessed.