No compensation for Lehman backed products



Investors in some products backed by the collapsed US bank Lehman Brothers are likely to miss out on millions of pounds in compensation. There were more than 2,000 people who invested money into so-called capital at risk products sold by some financial companies have been seeking refunds. Although it has been stated by the Financial Services Compensation Scheme (FSCS) that it has been concluded that sales brochures made the risks clear. This has lead to a group representing investors describing the decision as astounding. This case centres around complicated products which were being sold by several companied including Arc Capital and Income (ACI) based in London, NDF and Defined Returns LTD, all of which have now entered administration. This is an unusual case, as people who have invested in structured products are likely to receive compensation, although those investing in capital at risk products are unlikely to receive anything. The FSCS has stated, Following our review, we are satisfied that the relevant marketing materials provided adequate and appropriate warning that there was a risk to investors capital if the organisation backing these investment products failed. The risk is known as the counterparty risk and the firm backing these investment products was in each case part of the Lehman Brother group. Investors will not therefore have claims arising from the materials generally. Despite this news, investors can still place compensation claims, all of which will be judged on a case by case basis.