The Financial Services Compensation Scheme (FSCS) said it is finalising the claims process for ARM investors with claims against Catalyst Investment Group, and hopes to start inviting claims in early 2014.
The scheme said it was working with the provisional liquidators of ARM Asset Backed Securities, which went into liquidation on 9 October, to gather the details needed to start compensation proceedings against its distributer Catalyst.
"This work is ongoing and, once completed, we will be in a position to start inviting claims for compensation," the FSCS said.
It added: "We hope to start inviting claims from early 2014 and, in any event, will provide a further update on our progress before the end of December 2013."
The FSCS will accept claims from investors who invested in Luxembourg-based ARM bonds distributed in the UK by Catalyst between November 2009 and May 2010.
It will also have a "role to play" in claims against advisers who have sold the bonds "but have now gone bust and are not able to meet claims against them", such as Rockingham Independent, which was declared in default in 2012, it said.
It further plans to consider claims against Catalyst "in relation to other investments which Catalyst was involved in".
Catalyst was declared in default by the Financial Conduct Authority (FCA) on 4 October.
At the same time the FCA censured Catalyst for "recklessly misleading investors" in its promotion of the ARM bonds and fined its former chief executive Timothy Roberts, former director Andrew Wilkins, and the ex-compliance officer Alison Moran in October.
Catalyst was offering the bonds to IFAs in the UK when it was still awaiting the decision on its licence and had been asked to stop issuing bonds by the Luxembourg regulator, the FCA found.
Catalyst also wrote to IFAs and investors on separate occasions suggesting that ARM's licence application was voluntary, but did not spell out the implications if the licence was not granted, thus exposing investors to significant risks without their knowledge, the FCA said.
UK investors have invested £54m in ARM bonds, including £17.1m in un-issued ARM bonds, and may lose a significant part of their investment.
The FSCS has recently announced it was going to raise another interim levy on advisers before the end of the current levy year, to make up for losses incurred by the failings of ARM bonds and Catalyst.
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