Lifemark announced on 2 March 2010 that there has been an event of default on a number of the Lifemark bonds. The Lifemark bonds underpin a number of retail investment products provided and administered by the UK company Keydata Investment Services Limited (Keydata) to UK consumers. This means that investors with these Keydata products will not receive income payments due to them at this time.

The Lifemark bonds invest in life policies which require continuing premium payments. Lifemark states that the reason for the default is that it considers it necessary to apply the remaining cash available to the payment of insurance premiums, rather than making interest payments under the Lifemark bonds. Lifemark states that this is to ensure that the value of the Lifemark portfolio is preserved and it considers that this is in the best interests of the Lifemark bondholders. For details of which Keydata products are affected by this announcement please see the Keydata pages on PwC's website.

Securities issued by Lifemark remain suspended on the Luxembourg Stock Exchange.

The Provisional Administrator appointed on 20 November 2009 had his powers extended on 11 February 2010 to give him sole management powers of Lifemark.

The Commission de Surveillance du Secteur Financier (the CSSF) is still considering a restructure proposal submitted by Lifemark on 31 January 2010.

The CSSF and the FSA are working together in close cooperation in this matter and are in discussions with Keydata’s Administrators about the implications for Keydata’s clients. We are also liaising with the Financial Services Compensation Scheme (FSCS) in light of their current involvement in considering compensation claims against Keydata. At this time it is not clear whether the FSCS will have a role to play in considering claims following the recent Lifemark announcements.

On 1 February 2010 the Luxembourg financial services regulator, the Commission de Surveillance du Secteur Financier (the CSSF) suspended the securities issued by Lifemark S.A. (Lifemark) from trading on the Luxembourg Stock Exchange.

The CSSF is considering a proposal from Lifemark, submitted on 31 January 2010, to restructure its debt and change the terms and conditions of the existing Lifemark bonds to zero coupon bonds, so they would no longer carry an entitlement to receive interest.

Lifemark's bonds underpin a number of retail investment products provided and administered by the UK company, Keydata Investment Services Limited (Keydata), to UK consumers.

This proposal is subject to the approval of the CSSF which will consider whether the proposal will ensure that investors' monies are recovered or whether it would be in their best interests to pursue liquidation under Luxembourg securitsation law.

The investors in the Keydata products are the ultimate beneficial owners of the majority of the bonds issued by Lifemark. Investors in these Lifemark-backed products do not have to take any action at this time.

The CSSF and the FSA are working together in close cooperation in this matter. Further updates will be published on the FSA website.

For more information see the CSSF's website and the FSA's website.

The Luxembourg financial services regulator has appointed a 'provisional administrator' to work with Lifemark, a company whose secure income bonds were distributed by Keydata. This appointment is not an insolvency procedure under Luxembourg law and the provisional administrator will work closely with the firm's management to improve its business.

Investors in these Lifemark backed products do not have to take any action at this time.

The FSA will continue to work closely with the Luxembourg regulator on this matter. Further information is available from:

The FSCS has announced today that it will contact Keydata investors to let them know that they can start making claims for compensation on the following products:

For full details about the process of making a claim for compensation on all the above products please see the FSCS website.

Tax liabilities

HM Revenue & Customs (HMRC) have announced today that any tax due on the above products prior to Keydata's administration (8 June 2009) will be collected from Keydata not the investors. HMRC has also explained that investors have not lost their ISA tax wrapper as a result of investing in a Keydata ISA product. For details of how tax will be applied after 8 June 2009, please see the HMRC announcement published today.

What happens next?

You do not have to do anything. The FSCS will contact investors with details of how to make a claim for compensation.

Pricewaterhouse Coopers, the administrator of Keydata Investment Services (Keydata), has announced today that it has had to freeze some interest payments and some redemption rights to anyone that owns the following Keydata products:

People with money invested in the funds where Keydata provided third party administration services and those backed by major financial institutions are not affected – their investments are safe.

Keydata operates from three locations in London, Glasgow and Reading. It designs, distributes and administers its own structured investment products; and also portfolios for third parties.

If it emerges that Keydata has caused customers to suffer a financial loss and cannot meet its liabilities, then the FSCS may be able to help.

PwC will be regularly updating their website or you can call their helpline on 0844 391 3412, but at this stage no further information is available.

On 8 June 2009 we placed Keydata into administration and suspended the firm from carrying out any regulated activities because we had concerns about the firm’s financial position. We wanted to protect customers while a full assessment was carried out and appointed insolvency specialists from PwC to carry out an assessment and manage the firm in the meantime.

News articles on this website are accurate, to the best of our knowledge, only at the date of publication. If the information they contain changes, follow-up articles may be published.