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Topics: Lehman Brothers| FSCS
The FSCS is to start considering compensation claims for Lehman-backed structured products sold by NDFA, Defined Returns Limited and Arc Capital and Income, saying the products may have been mis-sold.
However, compensation will only initially be available for investors in ‘Capital Secure' products which claimed to offer protection on the initial investment.
The investments identified as Capital Secure include:
• NDF - Capital Secure Fixed Growth Plan March 2008
• NDF - Capital Secure Fixed Growth Plan April 2008
• NDF - Capital Secure Fixed Growth Plan June 2008
• DRL - Enhanced Returns Plan Issue 1
• DRL - Enhanced Returns Plan Issue 2
• DRL - Enhanced Returns Plan Issue 3
• DRL - Enhanced Returns Plan Issue 4
• DRL - Enhanced Emerging Markets Plan Issue 1
• DRL - Enhanced Returns Plan Issue 5
• Arc - Bull & Bear Enhanced Investment Plan 3
The FSCS will send compensation application forms to around 1,700 investors before the end of December. It aims to pay the majority of eligible claims within six months of receiving the form and supporting information.
Clients with ‘Capital At Risk' products will have to wait while FSCS carries out further investigations into whether these products were also mis-sold.
The investments defined as Capital At Risk products include:
•NDF - Fixed Income or Growth Plan February 2008
•NDF - Fixed Income Plan June 2008
•DRL - Kick Out Performance Plan Issue 1
•Arc - Fixed Income Plan 6
•Arc - Stepped Kick Out Plan 5
Further information on NDF and DRL is available from the administrators' website at
http://ndfa.creditorhelpline.co.uk/ or through their dedicated customer helpline on 0844 770 2203.
Further information on Arc is available from the administrators' website at
http://www.cbw.co.uk/arc.html or through their dedicated customer helpline on 0844 880
6511.
NDFA and Defined Returns went into administration on 14 October 2009 while Arc went into administration on 26 October 2009. The FSA determined NDF, DRL and Arc to be "in default" on the same date the respective firms went into administration.
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NDF - Fixed Income Plan June 08
My wife’s particular Plan NDF - Fixed Income Plan June 08 is virtually identical to the NDF - Capital Secure Fixed Growth Plan June 08 which the FSCS call Capital Secure. The terms and conditions are exactly the same. The only difference between the Plans is that investors in the Fixed Income Plan June 2008 could lose some capital if the FTSE 100 or Dow Jones Eurostoxx 50 indices should fall below 50% of their values at the start of the investment and of course this has not happened. I have the following written statements with respect to my wife’s investment: · “At maturity, the investment guarantees to return the original capital”. · “If either index falls by more than 50% from its initial index level at any point during the term but closes on 16th August 2013 equal to or above the initial index level, then your Capital will be fully repaid” · “Investments are authorised under the Financial Services and Markets Act 2000 and are therefore covered by the Financial Services Compensation Scheme. As such, in the event that the Provider defaults, the investor is protected for 100% of the first £30,000 and 90% of the next £20,000”. The provider has now defaulted and the FSCS is now considering if liabilities exist with respect to the Plan despite the above statements being given to us both verbally and in writing. We feel as the provider of the NDFA Fixed Income Plan June 08 has been declared as being in default and we have been equally mis-sold the product as those investing in so called Capital Secure products, that these products should be treated in the same manner. I fear that there is a danger that the FSCS will put out a different interpretation of different Plans with the same Terms and Conditions and leave some pensioners in the lurch.
Posted by: Worried