Only 10 per cent of the money invested in Lifemark-backed Keydata products has been recouped by the FSCS, the scheme has admitted.
The FSCS provided a $10m (£6.5m) loan in 2011 to Lifemark’s administrators KPMG to help salvage more capital from the fund as efforts were made to wind it up. Lifemark was finally liquidated in March but has been hit by 90 per cent losses.
The FSCS said its loan had been repaid and had helped “some recoveries” to be realised.
“These recoveries will fall some way short of the original investment value, but will be substantially higher than would otherwise have been the case without the FSCS’s intervention,” the scheme said in its 2013/14 Outlook document.
The loss means advisers and fund managers, which funded Keydata compensation through massive levy bills, are unlikely to see much of a reduction in future levy bills from any money collected by the FSCS from Lifemark.
In October 2011 Keydata and Lifemark founder Stewart Ford told Investment Adviser that Lifemark would suffer 90 per cent losses if the FSCS’s loan was backed ahead of a $150m rescue bid which he had arranged. His bid was ultimately unsuccessful after the backer, a US investment bank, pulled out.
Meanwhile, the FSCS continues to pursue advisers through the courts in a bid to reclaim more money lost through the collapse of Keydata and Lifemark. The scheme said it “remains confident of its position”. It predicted that the court cases would cost roughly £7.3m in 2013/14, on top of £3.9m in 2012/13.
