FSCS plans September judgement for Lifemark compensation

The Financial Services Compensation Scheme (FSCS) will announce in September whether the 25,000 consumers who invested £350 million into Lifemark via Keydata products can claim compensation.

The FSCS said it had been investigating whether Keydata was legally liable for any capital losses suffered by investors who have money in the troubled Luxembourg-based life settlement vehicle.

Lifemark has experienced liquidity problems and its bonds, which are listed on the Luxembourg Stock Exchange, were suspended by the Luxembourg financial regulator in February. The suspension of the bonds meant that investors have not received income payments from Keydata products underpinned by Lifemark.

The FSCS said it was unclear what losses face investors because there are a number of restructuring proposals for Lifemark. One of the proposals was for US hedge fund CarVal Investors to take over and run down the portfolio of life settlements owned by Lifemark over a 14-year period.

‘We have also been liaising with the FSA, Keydata’s administrators and the other parties involved in the restructuring proposals. There is currently uncertainty around when the parties will be in a position to update investors on the timing and terms of any proposal,’ stated the FSCS.

‘Whilst this remains unresolved it is unclear what losses investors may suffer. We will continue to monitor the situation and consider the implications for any compensation we may pay.’