Members of the Standard Life self invested personal pension who have investments in the collapsed Catalyst Investment Group Limited have been affected by a delay in receiving compensation from the Financial Services Compensation Scheme due to a potential tax liability.
The FSCS said it is working with Standard Life to ensure that those Sipp members who make a successful claim are not subject to any adverse tax and HM Revenue and Customs reporting requirements if the FSCS makes recoveries in relation to their claims.
Once FSCS pays compensation for claims against Catalyst it would expect to take “an assignment of a claimant’s rights” to pursue claims against Catalyst and any other party responsible for the loss. This is likely to include Arm Asset Backed Securities.
The FSCS said it will use any recoveries it makes to offset the cost of compensation and, in certain circumstances, make payments to the original investors.
As a result, Standard Life and the FSCS are working together to understand the tax position, and will be liaising with HM Revenue and Customs as necessary.
Once the tax consequences have been confirmed, Standard Life and FSCS will agree the appropriate approach and provide a further update.
While the FSCS is continuing to process claims whilst clarification is sought from HMRC, it will not be in a position to make offers of compensation to Standard Life Sipp members until the matter is resolved.
Standard Life will be contacting its Sipp customers with further details when the position becomes clear, the FSCS said.
Last year, investors who had money with Catalyst saw a delay in the claims process due to complications in gathering data from various sources.
At that time, the FSCS said it was continuing to work with the provisional liquidators of Arm Asset Backed Securities SA, which was declared in default on 4 December, to gather the information it needs to finalise its claims’ process.
Catalyst was the primary UK distributor of life settlements products manufactured by Arm. It sold sold £54m worth of ARM bonds, which were backed by a portfolio of second-hand life insurance contracts that have since floundered.
