Keydata Lifemark clients fear waiting years for cash

Keydata Lifemark investors have met with the Financial Services Authority (FSA), Financial Services Compensation Scheme (FSCS) and administrators to express concern they may not receive compensation for several years.

The FSCS will decide next month if Lifemark clients will be able to claim for compensation.

About 23,000 Keydata clients invested £349m in Lifemark, which is in administration and has suspended payments to bondholders to preserve capital.

The future of the investment vehicle is in doubt, with American hedge fund CarVal still in talks to provide Lifemark with a £40m loan despite reports that talks had broken down.

At a meeting last Friday at the offices of Keydata administrator PricewaterhouseCoopers, investors and advisers met with representatives from the FSA, FSCS and Lifemark administrator KPMG Luxemburg.

Investors are concerned that even if the FSCS decides that compensation could be due, they could be left unable to claim for years as it is not possible to assign a fixed value to their assets.

The investors at the meeting argued that potential losses from Lifemark have been caused by the failings of Keydata management. Keydata founder Stewart Ford has claimed that the FSA’s decision to put Keydata into administration in June 2009 caused Lifemark’s liquidity problems. (article continues below)

In April this year, the Serious Fraud Office widened its Keydata probe to investigate the activities, control and ownership of Lifemark.

Investors at the meeting called on the FSCS to offer investors their money back up to the current FSCS limit.

Geoff Hartnell, a director at Vintage Financial, who attended the meeting, says the FSCS should repay investors’ initial investments and then chase Lifemark for the recovery of this money.

“Once the FSCS steps in place of the investors, they will assume their position and chase recovery,” he says.