Investors protected in company collapse

The Financial Services Compensation Scheme said yesterday it had received 5,000 claims from people who invested in Keydata Secure Income Bonds; out of the 4,400 claims it decided on, 90 per cent of people qualified for compensation.

It has far far paid out 42m in redress to those people, and is continuing to work on the outstanding claims.

People who bought investments through Keydata which were sold as ISAs and backed by another company, Lifemark, will also be covered by the FSCS.

The scheme has established that none of the investments were qualifying ISAs, meaning that people are likely to owe money to HM Revenue & Customers as their investment did not have the tax-free status they thought it did.

It has resolved 11,950 of the 13,500 claims received relating to ISAs, and in 80 per cent of cases it will pay compensation because there is a tax liability. The money will be handed directly to HMRC.

The compensation will only cover investors' tax liability; it is not yet clear whether people have lost any of their capital.

Keydata was put into administration in June last year.