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Lifemark investors to finally receive FSCS top-up redress

Lifemark investors to finally receive FSCS top-up redress

Claimants who suffered losses in Keydata products based on Lifemark ‘death bonds’ will finally receive further compensation payments in the next few days, the Financial Services Compensation Scheme said.

In an announcement, the FSCS said payments will go to claimants whose compensatable losses exceeded the full level of compensation.

People who had more than £30,000 invested at the time of the failure will receive additional payments, following a distribution of recoveries made from the underlying life settlements bonds. These will take account of all five distributions received from the Lifemark trustee to date.

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The FSCS added that it understands that the trustee intends to make a final distribution of approximately 1 per cent of the nominal value of the issued bonds towards the end of 2016.

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 bonds 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.

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.

donia.o’loughlin@ft.com