Investors in stricken life settlements fund ARM Asset Backed Securities (ARM) are believed to be considering a class action lawsuit against the firm for the recovery of their assets.
A note to bondholders this week, in which the ARM board of directors claimed it will agree on a timescale for the sale of its assets and liabilities at its next meeting, has failed to quell investor fears.
The fund, which at its peak has a face value of nearly £200m, never achieved regulatory approval, and in August 2011 was frozen by the CSSF in Luxembourg (where the fund is based), leaving more than 1,500 clients locked out of their investments.
Alan Shanks, a member of the investors' steering group set up to recover client money, told IFAonline that the majority, who were mainly sold to through IFAs, were frustrated at the delays.
"We're at the end of our tether," he said. "We're shocked the way the FSA, FSCS and CSSF have treated this group of investors, primarily elderly people who have all their funds in this bond."
The FSA intervened in November to freeze cash held in the UK. But Shanks said the move was too late for those who were mis-advised.
"I'm getting emails from people who are either renting their own properties out or moving into a rented room themselves," he said.
"People are selling their properties because they were enticed or advised to put their entire pension pot into the ARM bond."
"You can argue whether it was a misjudgement on the part of IFAs - but no IFA should ever allow an investor to put their entire pot into one thing."
Investors were reportedly told last year there were at least four viable bidders for ARM's assets, including life settlement specialist Insetco. However, a proposed deal with the firm lapsed in November, with the parties unable agree terms.
In February, IFAonline reported the FSA was investigating the UK distributor of the fund, Catalyst Investment Group, for the mis-selling of the bonds.
One of the biggest purchasers of the bonds was retirement specialist Rockingham Group, that was fined by the FSA for recommending 426 elderly clients use the bonds in their SIPPs. The company has since been placed in liquidation, with insolvency practitioner Probitas appointed this week to begin the wind-up.
Catalyst Investment group, which deals with UK investors for ARM, was not available for comment.
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