ICS seeks Lords appeal on home income plans
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Your support makes all the difference.THE Investors Compensation Scheme is seeking leave to appeal to the House of Lords against a recent judgment giving investors in home income plans an extra pounds 20m in compensation.
The Appeal Court ruled at the end of June that the ICS had undercompensated victims of the plans, sold by financial advisers who have since gone out of business, under which elderly investors mortgaged their homes to provide an income.
The ICS has concluded that if the ruling stands it would be forced to reopen every case it has considered since it was set up in 1988. Richard Lawson, chairman, said: 'We are concerned that the judgment may have undermined the whole basis of the scheme. It may mean that the compensation process will become lengthy and unnecessarily legalistic for investors.'
Other ombudsmen are privately concerned about the implications for their schemes.
The Appeal Court judges said investors should receive whatever they might have expected to win in the courts had their financial adviser not gone out of business.
In the case of home income plans, this should be enough to repay the mortgage, and return investors to their initial financial position, even if they had already drawn some income from the plan. The ICS had offered reduced compensation to investors who had enjoyed some benefit.
The ICS says it will be six months before it knows whether it has permission to appeal to the Lords. If it does, it could take another year for the case to be heard. Meanwhile, the scheme will make interim payments to investors.
It has paid more than pounds 63m to 6,800 investors in its six years of operation. It is funded by a levy on firms belonging to Imro, the SFA and, from now on, the new PIA, up to a total of pounds 100m from each. Since 1991/92 the ICS has been unable to obtain insurance cover, but insurers will pay half the likely pounds 50m total compensation to home income plan investors.
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