Regulation  

FSCS to announce Rockingham outcome in next two weeks

The Financial Services Compensation Scheme is “close” to completing its review of claims against failed IFA Rockingham Independent Ltd and will be announcing details of the outcome within the next two weeks.

The FSCS announced in July that it was reviewing new evidence from a number of claimants in support of their claims against the now defunct firm, in relation to advice that the firm gave clients to invest into bonds issued by Luxemburg-based life settlements vehicle Arm Asset Backed Securities.

The new evidence came following a backlash against the scheme’s announcement in February that it had found no evidence to show that Rockingham was liable for claims relating to Arm and that losses were caused by Arm’s failure to gain authorisation to trade by the Luxembourg regulator.

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Rockingham was placed into liquidation in March 2012. The FSCS’s decision could increase the impact of Rockingham’s collapse on future FSCS bills for advisers.

Arm bonds were sold by Rockingham primarily as part of its Retirement Income Tri-Investment Account product. The adviser firm was fined £35,000 by the then Financial Services Authority in August 2011 for inappropriate sales of unregulated investments, including Arm products.

Arm has been in regulatory limbo since 2009 when the CSSF refused to let the fund trade in Luxembourg. It has also been refused a licence in Ireland in spite of having taken on more than £76m in investor money through its UK distributor, Catalyst Investment Group.

The FSCS has previously stated Rockingham was not “legally responsible for warning investors” about this development.

In a recent pensions ombudsman decision, Jane Irvine, deputy pensions ombudsman, rejected an investor complaint that Standard Life had allowed him to invest in Arm via his self invested personal pension, instead placing focus on the advice provided by Rockingham.

She said it was “clear” that the investment had been made by investor Walter Pisarski only after he had received and accepted the advice of Rockingham and that it was made prior to the release of the FSA report on Sipps in October 2012.

In a statement, the FSCS said: “We have been working with the Financial Conduct Authority and are now very close to completing this review. We will aim to provide details of the outcome within the next two weeks.”