Around 35,000 consumers have been given the green light to make compensation claims against a fund management firm two years after it went into administration.
The path has been cleared for investors who had dealings with Exeter Fund Managers Ltd (EFML) after it was declared in default by the Financial Services Compensation Scheme (FSCS).
EFML was a fund management firm which invested in split capital investment trusts. However, among allegations of mis-selling it went bust in March 2005.
Now, the FSCS says investors in three EFML funds may have claims against the firm.
The three funds involved are the Exeter Zero Preference Fund Unit Trust (ZPU), the Exeter OEIC Zero Portfolio (ZPA) and the Exeter High Income Unit Trust (EXHIT).
The FSCS concluded that from 1 April 2001, documents issued by EFML did not properly describe the risk level of the three funds. ZPU and ZPA should no longer have been described as low risk and EXHIT should not have been described as medium risk from that date.
Investors who relied on EFML's documents to buy in after 1 April 2001 may have a claim. Investors who continued to hold an investment after 1 April 2001 and can show that they relied on misleading documentation issued after then when making their decision to retain the investment may also have a claim.
FSCS director of claims, Ron Devlin, said: “Declaring Exeter Fund Managers Ltd in default means that we are now ready to consider applications from investors who may have claims relating to the funds.
“We are aiming to deal with these claims quickly and hope to complete the bulk of them in 2007/08. Some straightforward claims may be completed in a matter of weeks while the more complicated ones will take longer.”
The FSCS has already written to 4,500 investors who expressed an interest in making a claim against the company after a mailout from the administrators. It will now send a questionnaire to another 30,000 investors it believes may have invested in the three EFML funds to find out if they might have a claim.
A spokesperson said: “It is not yet possible to predict what the likely volume or compensation costs of the claims might be or the impact of the FSCS levy. An additional levy for the costs of splits during 2007/08 is likely.”
Investors who think they may have a valid claim against EFML for splits can get more information at www.fscs.org.uk or by calling on 020 7892 7300.
If you would like to comment on this story or speak to its author, telephone Simon Read on 0207 034 2680.IFAonline
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