Payout held up after investors go to court

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THE INVESTORS Compensation Scheme has told a group of elderly homeowners that their claim for compensation is being postponed.

The 27 are among hundreds of people awaiting compensation after being sold unsuitable home income plans.

The schemes were designed to enable the elderly to realise part of the capital in their home.

They took out a mortgage and put the funds in an investment bond to pay the mortgage and supplement their income.

The problem is that homeowners were frequently not advised that the bonds were a risk investment. Many are now unable to pay their mortgages.

Various institutions were involved in the schemes, including Cheltenham & Gloucester Building Society. The group recently issued a writ against C&G.

This week Paul Stafford, of Harrison Clark, the group's solicitor, received a letter from the compensation scheme, which is postponing payment to homeowners who have started proceedings.

The ICS would not give a reason, but a spokesman said: 'There is a provision in the rules for directors to delay making compensation if there are legal proceedings going on.'

Even before this week's events the ICS was under fire for the length of time it is taking to deal with claims.

Richard Barnett, of the solicitors Barnett Samson, said: 'I have clients dying from the stress of it all. Why cannot the ICS at least make an interim payment?'

Meanwhile, Fimbra, the investor protection watchdog, this week suspended Gordon Roy Smith, of Highcliffe Financial Services, Lymington, Hampshire.

Mr Smith was said to have produced a misleading brochure promoting a warrant fund linked to home income plans.

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