ICS faces claims for compensation: Home income plan victims get court go-ahead
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Your support makes all the difference.ELDERLY people refused compensation under the Financial Services Act for losses on investment-linked home income plans were given the go-ahead by the High Court yesterday to claim thousands of pounds from the Investors Compensation Scheme.
Thousands of people have lost money through home income plans where homeowners, mainly elderly people, raised mortgages on their homes and invested part or all of the proceeds in investment bonds. The aim was to produce an income and pay interest on the loan if necessary. The schemes fell apart when the bonds failed to perform as expected.
The ICS had refused to pay compensation to people who arranged their plans through independent advisers before 28 August 1988 - the date the scheme was established - or before the adviser was authorised under the Financial Services Act.
Barnett Sampson, London solicitors representing a group of home income plan victims, challenged this view on behalf of Margaret Weyell, a 69-year-old widow, and John Veniard, 78. Both bought their plans from now-defunct Aylesbury Associates.
Lord Justice Glidewell and Mr Justice Cresswell ruled that they had valid claims. Mrs Weyell had approached Aylesbury before 28 August 1988, but her losses started when the mortgage was executed on 2 September that year, Lord Justice Glidewell said.
Mrs Weyell's pounds 93,000 investment with Aylesbury fell to pounds 56,000, but it is not yet known exactly how much she will obtain from the ICS.
Mr Veniard bought his plan in 1987 but was deemed eligible to claim for losses that arose after August 1988. Lord Justice Glidewell said Aylesbury had reported to him on the progress of his fund after the crucial date.
The rulings on these cases could have implications for investors who bought a variety of other investment schemes from collapsed investment firms and who until now have been thought ineligible.
The judges also overturned a decision by the ICS to halve compensation payments to investors whose spouses had died before their investment adviser had formally been declared in default by the ICS.
The Securities and Investments Board does not believe the judgments on the pre-1988 investments mean that everyone who invested before then can claim.
The Investors' Compensation Scheme has paid or offered pounds 15.1m to 983 investors who suffered because of home income plans, according to the 1992/93 report of the Securities and Investments Board. The report says the total compensation paid since the scheme was introduced in August 1988 has reached pounds 41.2m.
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