The change comes after the Financial Services Compensation Scheme (FSCS) received new evidence showing that some IFAs failed to act on information at relevant times about the authorisation status of ARM.
The Luxembourg-based securitisation vehicle was listed on the Irish Stock Exchange and invested in traded life, or senior life settlement policies.
Despite having sold bonds since 2006, ARM first applied to Luxembourg’s Commission du Surveillance du Secteur Financier (CSSF) for a licence in July 2009.
Suspended trading
ARM sold two main types of bond in the UK through its distributor Catalyst Investment Group: the ARM Assured Income Plan and the ARM Capital Growth Bond. CSSF requested that ARM stop issuing bonds in November 2009, with trading not suspended until November 2010.
The final decision by the CSSF not to authorise ARM was announced in August 2011. Therefore, at no point was ARM authorised to sell bonds. Catalyst, however, was regulated by the FCA.
Since early 2014, the FSCS has been working through claims against Catalyst, in relation to its role in promoting the bonds.
Misleading information
Timothy Roberts and Andrew Wilkins were directors of Catalyst, with Wilkins also a director of ARM.
Both Roberts and Wilkins allowed Catalyst to provide misleading information about ARM’s licence status in a letter to IFAs in December 2009. A further letter, also containing misleading information, was approved by Roberts and sent to investors in March 2010.
In August 2013, the Financial Conduct Authority (FCA) fined Roberts £450,000 and prohibited him from working in regulated financial services. Wilkins was originally fined £100,000 and banned from undertaking “significant influence” functions.
An Upper Tribunal appeal in August 2015 upheld the FCA’s penalties against Roberts, but Wilkins was fined just £50,000 and his ban was overturned.
Liability
Prior to investigating claims against Catalyst, the FSCS found that failed financial advisers were only liable under very limited circumstances for losses due to negligent advice to invest in ARM bonds. As a result, a number of claims, many related to advice given by Rockingham Independent, were unsuccessful.
ARM’s bonds formed the underlying investment in some investor’s self-invested personal pensions (SIPPS) or individual savings accounts (ISAs). Compensation has been paid for around 3,700 claims.
The FSCS has now identified around 70 claims that may now be due compensation and will contact eligible claimants by the end of the month to confirm that their claims are being reconsidered.
