Earlier this week, Money Marketing reported that over £80m in fees and commissions were paid out of Luxembourg special purpose vehicle Lifemark to Keydata and an offshore-based vehicle incorporated in the British Virgin Islands whose ownership had not been confirmed.
Media House Internatioanl executive chairman Jack Irvine, who is investigating the circumstances surrounding the administration of Lifemark on behalf of Ford, has confirmed LASG was a company set up by a Ford family trust and was a “mechanism to collect fees”.
LASG was paid £38m as part of an agreement giving it 10 per cent of all client funds invested in the vehicle’s life settlement bonds.
This payment was for: “negotiating contracts for administrative parties, introducing and advising on distribution opportunities and providing support on “operational matters” related to the bonds.”
Keydata was paid £20m in total up-front fees and £21.5m of trail commission between 2006 and 2009 with a further £29m due to be paid between 2010 and 2019.
Keydata received an upfront 2.5 per cent commission for funds invested in the bonds and 2 per cent per annum for interest on income payable for each bond. Keydata paid IFAs 3 per cent initial commission and 0.5 per cent trail. Over £40m in total fees and commissions were paid from Lifemark to Keydata up until 2009.
Keydata International, the offshore sales arm of Keydata was paid a 5 per cent fee of all funds invested through initial commission charges and trail.
Ford’s spokesman says information about the fees and commissions paid out of Lifemark could be accessed through public records in Luxembourg and had been disclosed to Lifemark’s auditors, PricewaterhouseCoopers Luxembourg, bondholder trustee SMP Trustees and the Luxembourg regulator, who had raised no concerns.
He says the commissions and fees paid out from Lifemark to LAS Global and Keydata were “fully in line with comparable industry operating charges”.
Around 23,000 Keydata clients invested £349m in Lifemark through plans including the secure income bond 4, secure income plan and the defined income plan. Lifemark has halted income payments to investors to preserve liquidity and maintain the value of the policies.
It is understood that US hedge fund CarVal has advanced £3.5m to Lifemark as part of a proposed scheme of arrangement to be presented to SMP Trustees in the coming weeks.