Savers fail to win pounds 35m in Lords ruling

NIC CICUTTI

Thousands of savers hoping to win up to pounds 35m compensation to replace money already spent on holidays, cars and other living expenses were dealt a body-blow by a House of Lords judgment yesterday.

The Law Lords ruled that the investors, victims of the late 1980s home income plan scandal, should not be paid compensation for income they had already received from plans that later went sour.

Yesterday's test case ruling upholds a decision by the Investors Compensation Scheme, the safety net for victims of fraud and bad advice, to use its own discretion when offering redress to savers.

It also rescues the ICS from another cash crisis. Had the Lords found against the scheme, it would have had to appeal to the Government for a bail-out, the second in two weeks.

Richard Lawson, chairman of the scheme, said: "I am pleased that difficult decisions made by our directors have been confirmed as reasonable.

"I know that certain aspects of the ruling will be disappointing for the group of investors directly affected. However, it is good that a period of uncertainty about the scheme's role has now come to an end."

The Law Lords' judgment, reached by a four to one majority, centred on how much compensation home income plan victims were entitled to.

Some 2,000 investors have received compensation totalling more than pounds 30m over the scandal. But one couple, Philip and Rosetta Haring, had argued that in addition to any losses they suffered, for which they were compensated, they should be paid a further pounds 10,400 to replace money they received from their plan and spent on holidays and other living expenses.