Investments Q & As

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ARM is a securitisation undertaking governed by the Luxembourg law of 22 March 2004 on securitisation (the “Law”). It had been issuing bonds from Luxembourg since 2006 however, ARM had never obtained a licence from the Commission de Surveillance du Secteur Financier (the “CSSF”), the regulator in Luxembourg, nor been subject to its prudential supervision.


Why has ARM been dissolved?

On 21st August 2013 the Luxembourg administrative court of appeal confirmed the judgment of the Luxembourg administrative first instance court concerning the CSSF decision to refuse to grant a licence to ARM Asset Backed Securities S.A. [“ARM”] as a regulated securitisation undertaking under the Luxembourg law. The decision of the CSSF to refuse a license to ARM has become final. As a consequence, the CSSF has requested the Luxembourg Courts to order the dissolution and the liquidation of ARM.


Who are the provisional liquidators of ARM and what is their role?

ARM has filed an application in the UK courts requesting that ARM be placed under voluntary arrangement and that a provisional liquidator be appointed in the UK. On 14th October 2013, the Company issued a notice to Bondholders informing investors that on 9th October 2013, Mark James Shaw and Malcolm Cohen of BDO LLP an auditing and professional consultancy firm were appointed as provisional liquidators of ARM by order of the High Court of Justice of England and Wales.

The provisional liquidators have the exclusive power to control and manage ARM’s affairs, and the powers of the Directors of ARM are suspended. The provisional liquidators are now assessing which assets belong to ARM and their value, as well as how much may be due to creditors.


Who is Catalyst Investment Group Limited and what is its relationship with ARM?

In Malta, securities issued by ARM were sold through a number of financial intermediaries. At the time, a company in the UK called Catalyst Investment Group Limited [Catalyst], licensed by the UK’s financial regulator, had actively promoted investment in securities issued by ARM via a network of intermediaries located in the UK as well as Malta.

Following an analysis of the product documentation on ARM which Catalyst was responsible for, the UK’s Financial Services Compensation Scheme [‘FSCS’] has recently announced that Catalyst could be liable for some of the losses sustained by some of the investors in ARM.


Since Catalyst has now been declared in default, what is the position of Maltese investors?

The UK’s financial regulator has carried out an investigation into Catalyst and in October 2013 it declared Catalyst to be in default and so, unable to satisfy claims made against it.

According to UK law, in such situations, investors who might have been misled by firms authorised in the UK, can be eligible to receive compensation from the UK’s FSCS.

The MFSA has been actively collaborating with the UK’s financial regulator and has been in continuous discussion with FSCS in order to determine whether Maltese investors in ARM securities can submit claims to FSCS.

On 7 March 2014, the FSCS announced it would be inviting claims against Catalyst Investment Group Ltd/ARM by the end of March 2014.

The MFSA will be sending a letter to all investors in ARM in regard to the FSCS's application form. Click here for more information about the application form sent by the FSCS.

The MFSA has also issued a number of media releases aimed towards informing the public about the liquidation process of ARM - click here for the MFSA's website.
 



External Links:

Financial Services Compensation Scheme - United Kingdom

BDO, provisional liquidators of ARM 


Important note: The information provided on this page has been sourced from persons who are external to the MFSA. We have endeavoured to ensure that information on this page is updated and correct, but accept no liability for any errors contained herein. At the end of each section, you will find an external link to the official website of the administrators of the LM Australian Income Fund and the trustees of the LM Managed Performance Fund.


What is the current state of affairs of LM Investment Management Limited?

LM Investment Management Limited (“LMIM”) was licensed as an Australian financial services licensee and Responsible Entity under the Australian Corporations Act 2001 (Act). LM and its Funds were regulated by the Australian Securities and Investment Commission (ASIC).

On 19 March 2013 the directors of LMIM appointed John Park and Ginette Muller of FTI Consulting as Voluntary Administrators.

At a meeting of creditors held on 1 August 2013 creditors resolved that LM Investment Management Limited be placed into Liquidation and that the Administrators be appointed as Liquidators to wind up the Company.


External link:

Website of ASIC, the Australian financial services regulator

http://www.asic.gov.au/asic/asic.nsf/byheadline/LM+Investment+Management+Limited 
 
 
LM Managed Performance Fund (“MPF”) 


What effect does the transition of LMIM from administration to liquidation have on the MPF?

LM Managed Performance Fund is a trust that was previously administered by LM Investment Management Limited (LMIM). The transition of LMIM from administration to liquidation will not result in any significant change for the MPF and its investors.


Is the MPF registered with the Australian Investment and Securities Commission?

The MPF was not a registered fund with the Australian Investment and Securities Commission (ASIC) and therefore does not have the same disclosure and reporting obligations as some of the other LMIM funds. 


Who is acting as trustee of the MPF and what is its role?

On 12 April 2013, KordaMentha and its affiliated firm Calibre Capital Limited were appointed as trustees of the MPF pursuant to an Order of the Supreme Court of Queensland in Brisbane.

The MPF was closed on 19 March 2013 being the date of Voluntary Administrators being appointed to the former trustee.

The trustees are reviewing the MPF on an asset by asset basis with a view to maximising returns to investors from the loans which were given to third and related parties which are supported by second ranking mortgage security charges against real property assets. 


When will I receive my money back?

The trustees will communicate the MPF’s ability to provide a distribution – if any - once their investigation has progressed to a point that provides further clarity on the financial position of the MPF. 


How much can I expect to receive from my investment?

At this point in time, the trustees’ view is that the asset value of the loans of the MPF is significantly less than that of the total investment contributions of investors. Accordingly, the return on investors’ original investment is likely to be materially less than that contributed.

Interest payments and the distribution of capital to investors is at the discretion of the trustees of the MPF. Whilst the Trustees continue to review the MPF’s financial position, the MPF is not in a position to process redemptions or distribute funds.


External link:

Official information from KordaMentha, the Trustees of MPF: 

http://www.kordamentha.com/creditor-information/australia/109 
 
 
LM Australian Income Fund (“AIF”) 


What is the current situation of the AIF?


The Australian Income Fund was established in 2008 with the objective of providing investors with a competitive return by benefiting from investments in Australian registered first mortgages (debt instruments) secured against real estate assets in Australia. The AIF has not engaged in lending to new mortgages since 2012 and the appointed Administrators, John Park and Ginette Muller of FTI Consulting, have been working to wind down the current portfolio of mortgages in order to start returning capital to investors. 


Will the AIF be distributing any income?

From 19 March 2013 the AIF was closed to any new applications and it will not be declaring or paying income distributions and any income derived from AIF’s assets during this period will be applied to the unit price. 


When is the winding down process expected to be concluded?

On 14 June 2013, investors were informed that the winding down process was expected to take around 18 months to fully conclude, with progressive returns of capital expected to commence from the first quarter of 2014 and be finalised by the fourth quarter of 2014.

On 4 November 2013 however it has been determined that there remain some unresolved asset positions that will take time through 2014 and into early 2015 to resolve and allow for the effective wind-up of the AIF. 


How much can I expect to receive from my investment?

Based on current information made public by the liquidators, it is likely that investors should receive a final payout between 95 cents and 100 cents of their capital. However, if some assets are realised at a discount, investors may not receive the full return of their capital. 


When will the Voluntary Administrators be making any distributions?

The timeline for the expected payout will be made in progressive instalments over time as the assets of the AIF are sold and sufficient funds are available for distribution. Payout is expected to be finalised by March 2015.

On 17 December 2013 the Voluntary Administrators commenced the capital distribution as referred to in the notice issued on 4 November 2013 under section 601NC of the Corporations Act 2001. 


What is the amount that has been distributed by the Voluntary Administrators?

A total of USD 20 million was distributed amongst unit holders and this value is approximately equal to 42.8% of the Fund based on an AUD equivalency. These payouts represent a pro-rata equivalent capital distribution to all investors. 


Will the number of units I hold in the Fund decrease with every payout?

The capital distributions you receive will not affect the number of units investors hold in the Fund but the unit price will decrease proportionately to each capital distribution payment made. This means that as a result of this distribution there would be a 42.8% reduction in the unit price. 


Can the unit price change until a final payout is made?

The unit price can change according to the sales prices obtained on the assets of the Fund and any reserves set up to cover administration expenses as may be required.


IMPORTANT NOTICE:

Investors who have changed their account details since a distribution was last received are urged to update their account details as soon as possible through the following link http://u.b5z.net/i/u/10199052/f/Liquidation_change_investor_details.pdf to ensure funds are received into their nominated account. By providing current account details, investors will ensure payments are not held up as a result of being returned by a financial institution due to incorrect or out of date details. If in doubt, please contact the investment firm which sold you the investment or the firm with which you have transferred your holdings. 

Important note: The information provided on this page has been sourced from persons who are external to the MFSA. We have endeavoured to ensure that information on this page is updated and correct, but accept no liability for any errors contained herein. At the end of this page, you will find an external link to the official website of the foundation representing SNS bondholders.

Why has SNS Reaal been nationalised?

SNS REAAL is the holding company of, amongst others, SNS Bank and the insurance holding company REAAL N.V. (“REAAL”). The financial position of SNS REAAL deteriorated over the past few years, due, in particular, to the portfolio of real estate administered by SNS Property Finance B.V. (“Property Finance”) a former subsidiary of SNS REAAL N.V.
The losses at Property Finance led to a substantial deterioration of the capital base of SNS Bank in the second half year of 2012. On 1 February 2013, the Dutch Minister of Finance, after consultation with Dutch Central Bank (“DNB”), decided to nationalise SNS REAAL and expropriate the shareholders of SNS REAAL and the subordinated creditors of SNS REAAL and SNS Bank.
In a decree issued on 4 March 2013, the Dutch Minister made an offer of nil (€0) for each of the expropriated securities and capital components. 

What proceedings have been taken against the Dutch State regarding the expropriation?
On 3 April 2013 the Stichting Obligatiehouders SNS, a foundation representing SNS bondholders, filed an appeal with the Enterprise Chamber. The appeal stated that, according to international law, people who are expropriated must be compensated for their losses based on the real economic value. The crucial argument in the appeal before the Enterprise Chamber is the fact that, apart from the problems with the real estate activities conducted by the subsidiary, SNS had a healthy bank and insurance company that generated substantial cash flow. On this basis, the foundation argued that nationalisation was not necessary but because it was now definite, the bondholders should be compensated based on the quotations on the stock exchange on January 31st 2013.
On 11 July 2013, the Enterprise Chamber issued its preliminary verdict where it proposed to appoint three experts to determine the real value of SNS Reaal. The Enterprise Chamber stated that in its opinion the measure for compensation should be the full economic value (as also mentioned in the European Convention of Human Rights).

Has the Dutch state appealed the decision of the Enterprise Chamber?
In August 2013 the Dutch State filed an appeal at the High Council against the preliminary verdict of the Enterprise Chamber. The implication of this appeal is the postponement of the appointment of experts for an indefinite period of time. The verdict from the High Council is expected to be issued within three to six months from this date.

What other proceedings have been initiated by the foundation?
Pending the verdict of the Enterprise Chamber, the Foundation decided to file a complaint with the European Court of Human Rights against the Dutch State regarding the expropriation of subordinated bondholders in SNS. The Foundation expects an update by the end of December 2013.

External link:
Dutch Central Bank: 
http://www.dnb.nl/en/home/index.jsp 
Stichting Obligatiehouders SNS, the foundation:
http://sos-ns.com/ 

IMPORTANT NOTE:

The information provided on this page has been sourced from persons who are external to the MFSA. We have endeavoured to ensure that information on this page is updated and correct, but accept no liability for any errors contained herein.

At the end of this page, you will find an external link to the official website of the provisional liquidators of ARM.

The MFSA has also issued a number of media releases aimed towards informing the public about the liquidation process of ARM -
click here for the MFSA's website.
   


ARM is a securitisation undertaking governed by the Luxembourg law of 22 March 2004 on securitisation (the “Law”). It had been issuing bonds from Luxembourg since 2006 however, ARM had never obtained a licence from the Commission de Surveillance du Secteur Financier (the “CSSF”), the regulator in Luxembourg, nor been subject to its prudential supervision.  


Why has ARM been dissolved?  

On 21st August 2013 the Luxembourg administrative court of appeal confirmed the judgment of the Luxembourg administrative first instance court concerning the CSSF decision to refuse to grant a licence to ARM Asset Backed Securities S.A. [“ARM”] as a regulated securitisation undertaking under the Luxembourg law. The decision of the CSSF to refuse a license to ARM has become final.  As a consequence, the CSSF has requested the Luxembourg Courts to order the dissolution and the liquidation of ARM.  


Who are the provisional liquidators of ARM and what is their role?  

ARM has filed an application in the UK courts requesting that ARM be placed under voluntary arrangement and that a provisional liquidator be appointed in the UK. On 14th October 2013, the Company issued a notice to Bondholders informing investors that on 9th October 2013, Mark James Shaw and Malcolm Cohen of BDO LLP an auditing and professional consultancy firm were appointed as provisional liquidators of ARM by order of the High Court of Justice of England and Wales.  

The provisional liquidators have the exclusive power to control and manage ARM’s affairs, and the powers of the Directors of ARM are suspended. The provisional liquidators are now assessing which assets belong to ARM and their value, as well as how much may be due to creditors.  


Who is Catalyst Investment Group Limited and what is its relationship with ARM?  

In Malta, securities issued by ARM were sold through a number of financial intermediaries. At the time, a company in the UK called Catalyst Investment Group Limited [Catalyst], licensed by the UK’s financial regulator, had actively promoted investment in securities issued by ARM via a network of intermediaries located in the UK as well as Malta. 

Following an analysis of the product documentation on ARM which Catalyst was responsible for, the UK’s Financial Services Compensation Scheme [‘FSCS’] is considering whether Catalyst could be liable for some of the losses sustained by some of the investors in ARM.    


Since Catalyst has now been declared in default, what is the position of Maltese investors?  

The UK’s financial regulator has carried out an investigation into Catalyst and in October 2013 it declared Catalyst to be in default and so, unable to satisfy claims made against it.

According to UK law, in such situations, investors who might have been misled by firms authorised in the UK, can be eligible to receive compensation from the UK’s FSCS. 

The MFSA has been actively collaborating with the UK’s financial regulator and has been in continuous discussion with FSCS in order to determine whether Maltese investors in ARM securities can submit claims to FSCS.  

At this stage, the FSCS has not concluded whether Maltese investors in ARM are eligible for compensation. The Authority is collaborating with the FSCS in providing the requested information. Nevertheless, it is worth noting that if the FSCS decides that Maltese investors can make valid claims in respect of Catalyst’s actions, the maximum amount of compensation payable per person is £50,000.  


Do investors need to register their interest or claim in the provisional liquidation?  

On 14 January 2014, the provisional liquidators issued a notice informing ARM investors that they are required to complete an identification request form [see specimen below] and return it to the provisional liquidators by not later than Thursday 13 February 2014.  Investors are required to attach copies of contract notes as proof of their investment.   Investors should obtain the ISIN number referred to in this form EITHER from the firm which had sold them ARM or the firm with which their investment is now registered.  

Investors who fail to submit this form are likely to be excluded from receiving any distributions from ARM in the future.    


What information do I need to compile the identification form correctly?  


  
 This is the Identification Form which BDO requires investors to compile. On this same form investors are also required to state whether they intend to be present at investors' meeting which will be held on Monday 3 February 2014 in London. See Q&A below.

If you have multiple investments in ARM, you can group all transaction in one Identification Form as long as they are registered under the same name (for example if you have an investment in joint names and another one in your sole name, you will need to fill in two forms).  

Besides your name and address, you need to provide details of the name of the investment firm with which your investment is currently registered. This means that if you had originally invested in ARM with a firm (say Firm X) and you have recently transferred your holdings to another firm (say Firm Z), you need to submit details of the latter firm (i.e. Firm Z), as well as any document which shows the registration transfer from Firm X to Firm Z.  

Before you start filling the table in the form, make sure that you have: 

  1. Copy of the contract note issued by ARM (see below).  From this information you can find the Tranche Number. Details of the Date Invested and Amount Invested are to be filled in the row which indicates your Tranche number.
  2. The ISIN – details of your ISIN can only be obtained from the firm which had sold you ARM or the firm with which your investment is now registere.
  3. The Investment Account Number – if your holdings are held under nominee, the contract note issued by ARM would contain this information (e.g. Firm Z a/c Nominee.

You also need to attach two contract notes (1) the one provided by the firm at the time of investment as well as (2) the contract note issued by ARM.  Specimen copies are located below. Do not send original documents – copies are enough.                                    

This is a specimen contract note issued by the investment firm   

              



This is a specimen contract note issued by ARM  
   

You also need to attach a copy of your ID card. If your ID card is expired, attach a copy of your passport or driving licence – any official document which bears your name and address will do.
 
MAKE SURE THAT YOU DO NOT SEND THE FORM AT THE LAST MINUTE.  THE LIQUIDATORS REQUIRE THIS FORM, AS WELL AS ATTACHMENTS, BY THURSDAY 13 FEBRUARY 2013.


How should I send the form and documents?

You may if you so wish, request your adviser to fill and send the form on your behalf.  It would be best to request a copy of all the documentation for future reference.

If you intend to submit the documents yourself, it is advisable that you send the form and attachments by mail at this address:   

BDO LLP
55, Baker Street
London W1U 7EU
United Kingdom
 
(Re: ARM ABS SA)

Include your return address.

Alternatively, you may email the form and attachments (scanned copies) to ARM.ABS.SA@bdo.co.uk. In the SUBJECT field write: ARM ABS SA. Address your email to: ATTENTION: KIRSTY KEAY and JOSHUA GUEST. 

You may write the following in the text:

Dear Messrs Keay and Guest

Attached please find my Identification Request and Pre-Registration Form duly compiled, together with relevant documents, in support of my claim to the Provisional Liquidators of ARM Asset Backed Securities SA.

Kindly acknowledge receipt of this email.

Sincerely
[Your name and address]      


I heard that the Provisional Liquidators are organising a meeting for investors, what is the purpose of this meeting?  

The provisional liquidators are organising a meeting for all investors on Monday 3rd February 2014 at 1pm (GMT) in London.  The purpose of this meeting is to update investors and discuss the anticipated process and options for the issuer and its property in the current circumstances.   

Those investors that wish to attend the meeting should complete the IDENTIFICATION FORM AND PRE-REGISTRATION FORM [see specimen above] return it to the provisional liquidators by not later than Thursday 30th January 2014 together with proof of their holding as well as their identification (e.g. driving licence, passport).   

During the meeting of 3 February 2014, investors will also vote to elect members to sit on an ad-hoc committee of ARM investors, which the provisional liquidators would consult at regular intervals and they will be provided with non-public information.  

If investors are unable to attend the meeting in person, but would still like the opportunity to vote, they should tick the applicable box on the pre-registration form.  Access to the meeting will be restricted to those investors who have pre-registered.   


From where can I obtain further information about the liquidation process?  

The provisional liquidators are providing information to investors on their website: www.bdo.co.uk/arm-abs-sa. The forms referred to above, as well as updates in regard to the whole process, are available from this same link.

Claim forms received from the
UK’s Financial Services Compensation Scheme
  

The MFSA refers to the claim form which investors in ARM Asset Backed Securities S.A. (“ARM”) have recently received from the Financial Services Compensation Scheme ["FSCS"].  

The FSCS has confirmed that the claim forms have now been sent to all Maltese investors that hold an investment in ARM.  Investors should have received a pack by post containing a letter and the claim form.  All those investors that have not received such claim form by end of April 2014 should contact FSCS’s Initial Contact Team on 0044 20 7741 4100 or enquiries@fscs.org.uk.    

The MFSA has also translated the FSCS documentation into Maltese.  You may download this document by clicking here or call on 80074924 (MFSA helpline) if you need a printed copy.  The Maltese version is available purely for guidance and should not be used to lodge a claim with the FSCS.  Furthermore, the MFSA accepts no responsibility for any inaccuracy in the Maltese version of the claim form. Replies to the FSCS should be made in English, and not in Maltese.

Investors can fill in the form sent by the FSCS without assistance.  However, in the event that investors require assistance, independent professional advice should be sought.  The MFSA is unable to provide assistance to investors when compiling the form.

Investors who request assistance when completing the claim form should ensure that information provided therein is accurate prior to signing the claim form.  Investors should keep a copy of the claim form before sending it to the FSCS.  

Investors may contact the MFSA’s Consumer Complaints Unit on 80074924 or send an email to consumerinfo@mfsa.com.mt if they have any queries.



Frequently Asked Questions on ARM Asset Backed Securities S.A. and Catalyst Investment Group Limited


The following Questions and Answers have been prepared by the Malta Financial Services Authority (“MFSA” or “the Authority”) to further assist Maltese investors in ARM Asset Backed Securities S.A. (“ARM”) when compiling the application form for compensation sent by the Financial Services Compensation Scheme in the UK. The UK’s FSCS have issued other FAQs – click on this link:

In this FAQ, references to “claim form” or “application form” refer to the form sent by the UK’s FSCS to all ARM investors.

1. What is the UK’s Financial Services Compensation Scheme [‘FSCS’]?

The FSCS is the UK’s compensation fund of last resort for customers of authorised financial services firms. The FSCS pays compensation if a firm is unable or likely to be unable, to pay certain claims against it. This occurs when the firm has stopped trading and has been declared in default. The FSCS does not charge customers for its services. 


2. What is Catalyst and what has happened to it?

Catalyst was the primary distributor of ARM’s bonds in the UK, marketing them to investment firms and Independent Financial Advisers (IFAs) which in turn promoted and sold them to retail investors. In Malta, securities issued by ARM were sold through a number of such firms. At the time, a company in the UK called Catalyst Investment Group Limited [Catalyst], licensed by the UK’s financial regulator, had actively promoted investment in securities issued by ARM via a network of firms and IFAs located in the UK as well as Malta.

Catalyst was also responsible for producing the brochures which were used to promote the bonds to IFAs and consumers. The UK’s financial regulator had carried out an investigation into Catalyst and in October 2013 it declared Catalyst to be in default and so, unable to satisfy claims made against it. According to UK law, in such situations, investors who might have been misled by firms authorised in the UK, can be eligible to receive compensation from the UK’s FSCS.

Following an analysis of the product documentation on ARM - for which Catalyst was responsible – the FSCS has now determined that it may be liable for some of the losses sustained by some of the investors in ARM. Over these past few months, the MFSA has been actively collaborating with the UK’s financial services regulator and has been in continuous discussion with FSCS in order to determine whether Maltese investors in ARM securities can submit claims to FSCS. 


3. What types of claim against Catalyst can be referred to the FSCS?

FSCS is able to deal with claims in relation to Catalyst’s role in distributing and promoting ARM bonds to licensed entities and consumers.

Following an analysis of Catalyst’s role as distributor of the ARM bonds and the financial promotions for which Catalyst was responsible, the FSCS reached the view that Catalyst may be liable for losses in many cases. The FSCS started inviting claims against Catalyst in April 2014. 


4. How do I make a claim against Catalyst with FSCS?

Since Catalyst was declared in default in October 2013, the FSCS has sought to gather details of ARM investors from various third parties, including ARM’s Provisional Liquidators.

With the benefit of this information, FSCS contacted all known ARM investors in March 2014 and requested them to complete and return an FSCS application form.

The application form asks the claimants to set out key information to support their claim, such as details of the ARM bonds investment, the firms which the investor dealt with in connection with that investment and why they decided to invest. The claimants will also be asked to send further evidence to support their claim, including original versions of documentation relating to the ARM investment (such as receipts, contract notes, investment certificates, investment valuation statements) as well as a bank statement indicating the sum invested in the ARM investment(s).

The FSCS claim form describes in detail what documentation investors should attach with their claim form. This evidence is required by the FSCS in order to verify the individual’s claim against other evidence held by FSCS.

ARM investors who have not received an FSCS application form by the end of April 2014 should contact FSCS’s Initial Contact Team on 0044 20 7741 4100 or enquiries@fscs.org.uk. 


5. What evidence would I need to provide to the FSCS if the investment was not made through a bank transfer?

Where the payment has not been effected through a bank transfer and, therefore, the sum invested is not evidenced by a bank statement, investors can provide other relevant records detailing the source of the original investment amount. For example, where the investment had been paid in cash, the claimant should provide the receipt issued by the firm. If payment was done by cheque, the claimant should obtain a copy of that cheque [cheque image] from the bank (the bank statement would not indicate the payee’s name). 


6. How will FSCS determine whether I am eligible for compensation?

Once FSCS has received a completed FSCS application form, it will proceed to assess the claim to determine whether it is eligible for compensation under FSCS’s rules.

These assessments will be carried out on FSCS’s behalf by Deloitte LLP, which has been appointed by FSCS to assist in processing claims made against Catalyst. Accordingly, claimants may subsequently receive correspondence from Deloitte LLP regarding their claim. All claims will be considered on a case-by-case basis, based on the information presented in the FSCS application form along with any accompanying evidence. 


7. Will FSCS treat claims relating to “pending investors” differently from other types of claim?

ARM’s bonds were marketed in several tranches. There were bonds in tranches 1-8, sold between 2006 and 2009. There is also a group of pending investors for tranches 9-11, purchased from 2009. While these pending investors transferred funds to ARM or their investment firm, it is not clear whether the bonds in tranches 9-11 have been issued. FSCS’s claims process for pending investors will be the same for other categories of claimants, but the assessment of Catalyst’s legal liability regarding the nature of such claims will be different.

There is currently an ongoing legal debate as to whether bonds comprising tranches 9-11 were issued by ARM. The Provisional Liquidators are currently seeking independent legal advice on this matter.


8. What is the level of protection provided by FSCS?

Compensation payable by FSCS to eligible claimants’ for claims against Catalyst relating to investment business regulated by the FCA is up to a maximum of £50,000 per person. 


9. If I receive compensation, will my legal rights be transferred to the FSCS?

Yes. Under FSCS’s rules and the terms set out in the application form, when FSCS pays compensation, claimants in effect transfer or “assign” all of their legal rights to their claim against the firm in default and/or any relevant third parties to the FSCS. In other words, the FSCS then “stands in the shoes” of the claimant. Once claimants transfer their rights to FSCS, they can no longer claim directly against Catalyst and/or any relevant third parties. Additionally, the FSCS controls the claimants claim in, for example, the provisional liquidation of ARM. 


10. I have invested in more than one bond/tranche through Catalyst; should they all form part of my claim?

Yes. Claimants should include all investments in their claim to the FSCS, and claimants should not submit “partial” claims (i.e. whereby the claimant makes a claim for some tranches but not for others).

According to the FSCS’s terms and conditions (see the application form) all the investor’s rights in investments through Catalyst will be transferred to the FSCS as soon as compensation is made, listed in their entirety on the application form. The FSCS is duty bound to make recoveries using such transferred rights (where FSCS considers it reasonably possible and cost effective to do so). Therefore, the FSCS needs to be informed of all investments properly in order to pursue the relative recoveries. Investors that do not wish to transfer their rights in any investment to FSCS, should discuss the issues with the FSCS before submitting a claim for compensation. 


11. If my claim against Catalyst is accepted by FSCS, can I still pursue a complaint against my investment firm?

Under FSCS’s rules and the terms set out in the application form, when the FSCS pays compensation, claimants transfer or “assign” all their legal rights to claim against the firm in default and/or any relevant third parties. This means that, if FSCS pays compensation on a Catalyst/ARM claim, the claimant’s rights to claim against the investment firm that recommended the ARM investment will be transferred to FSCS. Accordingly, if a claimant accepts any compensation from the FSCS, he/she will no longer be entitled to claim against that investment firm for the same losses. Furthermore, the claimant would no longer be entitled to claim in the insolvency of ARM for the same losses.

Therefore, once FSCS has paid compensation to a particular claimant it will take over all of that claimant’s rights, and she/he would not then be able to pursue a further claim against the firm which sold the investment. The assignment of rights takes effect when a claimant accepts the compensation paid in relation to a claim. 


12. I had filed a complaint with the MFSA’s Consumer Complaints Manager. Do I need to withdraw or inform the FSCS of my complaint?

In Section F question 3 of the application form claimants are asked to provide details of complaints in relation to claimants’ investments in ARM with the UK’s Financial Ombudsman Service. Investors who have lodged a complaint with the MFSA’s Consumer Complaints Manager should make reference to their complaint in the application form. The claimant should also provide copies of relevant correspondence with the MFSA’s Consumer Complaints Manager.

The FSCS have confirmed that investors do not have to withdraw any complaint they have in relation to their ARM investment. However, they should provide details in their FSCS application form of any claim they are pursuing. 


13. Can I seek assistance when filling the FSCS claim form?

The claim form should be filled in by the investor and all documentation provided must be in original. However, if investors require assistance when filling the form, they are urged to seek independent professional advice.

Claimants who have been assisted in completing the claim form, should ensure that the information included is accurate prior, to signing the claim form. It is the claimants’ responsibility to ensure that the details and information completed in the claim form is correct – even if they asked someone else to fill in the details on their behalf. 


14. I do not have original copies of documentation. Will photocopies be enough?

Claimants should ensure that they send original documents to the FSCS, where originals are specified. If they are unable to provide original documentation as requested, they should explain why this is the case when returning the claim form. Certified true copies can be attached to the claim form. The investment firm which sold the investment should be in a position to provide certified true copies. Should claimants not be in a position to contact their intermediary or are finding it difficult to obtain such documents from the firm, they should contact the MFSA’s Securities and Markets Supervision Unit on 2548 5112 or 25485480. 


15. What information should I include if I invested in more than one tranche?

There might be the case where an investor held an investment in more than one tranche. However the investor redeemed one or some of those investments and received the settlement thereof. When compiling the claim form, investors should include details of ALL investments in Section D1, including those which had been sold prior to ARM being declared in default. Further details could also be provided in Section E6 or E7 of the claim form. 


16. What information should I include in the claim form if the investment has been transferred to another person?

The application form needs to be completed by the original investor. However, where the original investor has transferred the investment to another person and ARM/ Catalyst provided the acquiring investor with a new contract note, the original investor should provide full details about the transfer of the investment to the acquiring party, including relevant documentation. The claim form should therefore include details of both the original and acquiring investors. 


17. I have been asked to provide bank details in Section K of the application form. Should I provide my personal account details?

The FSCS normally pays compensation directly to the claimant. In this regard, claimants would be required to include personal bank account details in Section K of the application form. The IBAN and BIC are located on bank statements or obtained directly from the bank.

It is likely that compensation will be paid in the currency of the investment. If the currency of the bank account is not the same as the currency of the investment, additional charges including currency conversion charges may apply.

Although payment by bank transfer is more convenient, there may be instances where the FSCS may pay by cheque, such as if the investor/claimant does not have a bank account. If this is the case, claimants should indicate so in Section K and request that payment is made by cheque. Charges apply when presenting the cheque at your bank.

Investors who receive compensation should not rush into re-investing the proceeds. Indeed, investors should take their time to consider all available options in their best interest and after taking independent financial advice. 


18. The claim form is requesting some information with which I am not familiar. Can you help?

In Section A under the Claimant Details, investors are required to give the National Insurance Number. The FSCS have confirmed to the MFSA that Maltese investors can provide the identity card number.

In case where investors were provided with a promotion and selling service, investors should provide the firm’s details in Question E1 of the application form with further explanation of the firm’s role included in Question E2. In Section K, unless claimants are providing details of a bank account in the UK, they do not need to provide “Account Sort Code” and “Roll No.” details. 


19. Are there time limits to submit my application?

FSCS rules set no time limit for making a claim for compensation to the FSCS, although a claim may be subject to legal time limits. If ARM bondholders wish to separately pursue claims against other persons they should be aware that other limitation time periods may apply to different types of claims. If in doubt, seek legal advice. 
 
 

Downloads:

The application for compensation sent by the FSCS translated into Maltese



Last updated: Sep 07, 2016

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