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Keydata compensation to begin

Keydata compensation to begin

Category: Investments

Updated: 16/11/2009
First Published: 16/11/2009

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Investors with money in the failed investment firm Keydata have been told they can now start applying for compensation.

Having confirmed that Keydata is in default, the Financial Services Compensation Scheme (FSCS) said it can now start considering claims against the firm.

Keydata was placed into administration in June, since when the FSCS has been working with the firm's administrators PricewaterhouseCoopers, the Financial Services Authority (FSA) and HM Revenue and Customs (HMRC), to understand the implications of the failure of the firm for its customers.

The FSCS said its work had been focusing on two broad categories of potential claims.

The first relates to around 5,000 investors in Keydata's Secure Income Bond issues 1, 2 and 3.

The FSCS said many of these products were bought by investors on the basis that they were ISA qualifying investments, but that it had turned out never to be the case.

Claims are to be considered on a case by case basis, but it is anticipated that the vast majority of these customers will be eligible for compensation.

The remaining investors in these products, who did not invest in ISA products, have been told they are now also able to bring a claim for compensation to the FSCS.

Compensation claim forms will be sent to all customers who invested in these products before the end of November.

The second category relates to ISA investments in products including the Secure Income Bond issue 4, the Secure Income Plan issues 1 to 12 and 14, the Defined Income Plan issues 1 to 8 and the Income Plan issues 1 to 12 and 14.

HMRC has confirmed that these products, which were promoted as being eligible for an ISA, do not meet the requirements for ISA investments. Approximately 16,000 investors with ISA products which had a term of five years or less are affected.

The vast majority of customers will not pay tax on their investments in the ISAs, as HMRC will pursue the company for tax due prior to administration, and FSCS will pay the tax on behalf of investors for the period since the administration.

People will also be able to reinvest their money in a new ISA without losing their tax-free allowance, once their investment is redeemed or matures, or they receive compensation.

The FSCS is to write to all affected individuals to explain what they need to do next.

"I am pleased to say that we are now in a position to start sending application forms to a large number of customers of Keydata who have suffered immediate financial loss," said Loretta Minghella, Chief Executive of the FSCS. "Once these forms are returned to us we will assess the claims as quickly as we can, ensuring that those entitled to compensation get the payments they are due."

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Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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