Investors' compensation soars to pounds 18.6m

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The Independent Online
COMPENSATION paid to badly advised or cheated investors soared last year by 48 per cent to pounds 18.6m, and claims continue to rise.

The Investors Compensation Scheme made payments to 1,723 investors in the year to 31 March. Many of these were home income plan cases - where typically elderly investors were encouraged to mortgage their homes to provide money for investment.

Another pounds 10.5m was paid to 1,105 investors in the first four months of this financial year.

The ICS has paid or offered pounds 16m of compensation to home income plan investors. Richard Lawson, ICS chairman, said the scheme may have dealt with two-thirds of the 1,600 home income plan claims.

Once again, the overwhelming majority of compensation payments - pounds 15.4m plus interest - were due to the financial advisers regulated by Fimbra. Failures covered included Dunsdale Securities, Fisher Prew- Smith and The Levitt Group.

Stockbrokers regulated by the Securities and Futures Authority were responsible for pounds 456,519 of compensation paid to 218 investors. The firms included AJ Bekhor and Diameter Stockbrokers.

The Investment Management Regulatory Organisation and the Securities and Investments Board, the senior watchdog, each had one firm in default. The Imro case cost the ICS pounds 1.6m.

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