Claimants who suffered losses in Keydata products based on Lifemark ’death bonds’ can expect to receive further payments in the coming months, confirmed the Financial Services Compensation Scheme.
This follows Lifemark trustee’s recent announcement that another distribution to bondholders was paid on 20 November. The FSCS expects to receive the funds from the trustee within the next few weeks, which will then passed on to claimants.
Distributions from the trustee are calculated using the method specified by the court, meaning amounts due to individual bondholders will vary depending on which Lifemark bond(s) they invested in.
Trustee PricewaterhouseCoopers previously predicted the distribution would be worth around 2.5 per cent of the nominal value of the bonds, with the final payout being equal to around 15 per cent.
Keydata had originally distributed $605m (£386m) worth of Lifemark bonds.
Following a court order, the FSCS announced in September 2013 it would provide top-up payments to compensate early-settling investors and to counter a disproportionate hit on compensation sums from £32m worth of scheme administration fees.
Approximately 16,000 Lifemark investors have been compensated with a combined total of £228m. This is £32m lower than the £260m value of claims from these investors as assessed by the FSCS, before the scheme deducted “reasonable costs of recovery and distribution”.
Top-up payments were required to correct disparities in redress caused by its previous methodology, which based payments on the ‘compensatable amount’ of any claim.
Due to the way a compensation cap was applied - 100 per cent on the first £30,000, and then 90 per cent of the remainder up to a hard cap of £48,000 - this resulted in investors that settled later benefiting from a distribution that those who settled early did not.
peter.walker@ft.com
