ARM compensation fund to invite claims against Catalyst imminently

The Financial Services Compensation Scheme (FSCS) - the UK's compensation fund of last resort for customers of the ARM Asset Backed Securities SA (ARM) - has announced it expects to be in a position to start inviting claims against Catalyst Investment Group Ltd by the end of March.

Catalyst was the primary distributor of these bonds, marketing them to investment intermediaries and independent financial advisers who in turn promoted and sold them to retail investors. Catalyst was regulated by the FCA in the UK.

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Following an analysis of Catalyst's role as a distributor of the ARM bonds and the financial promotions which Catalyst was responsible for, the FSCS reached the view that Catalyst may be liable for losses in many cases.

"We are close to finalising the process under which claims against Catalyst will be investigated. Once the process has been finalised we will write to all known investors who bought ARM bonds inviting them to make a claim against Catalyst.

"This will include investors who received advice from independent financial advisers (IFAs) based in Malta. Following an investigation into how the ARM bonds were distributed and sold in Malta, FSCS is satisfied that investors who dealt with Maltese IFAs will be able to claim against Catalyst in the same way as investors who dealt with UK IFAs."

Investors will be asked to complete an FSCS application form setting out their claim. The application form will ask the claimant to provide key information to support their claim such as details of the bonds they invested in, the firm that advised them to invest in ARM and why they decided to invest.

The claimant will also be asked to send further evidence to support their claim, such as statements detailing the payments made into their ARM investment and any documents they relied upon when making the decision to invest.

Investors who have provided this information to FSCS in the past will not need to re-submit the supporting evidence again. 

A further update will be provided on the FSCS website once it starts to contact ARM investors. The fund said that investors do not need to take any action in the meantime.

Catalyst was the primary distributor of ARM bonds sold between 2006 and 2010. ARM had not been authorised by the Luxembourg financial services regulator, the Commission de Surveillance du Secteur Financier (CSSF), or authorised by the UK financial services authority.

On 4 October 2013, the FCA announced that Catalyst had been declared in default. On the same day, the UK's financial services authority FCA announced that it had censured Catalyst for breaching regulatory principles when promoting and distributing bonds offered by ARM.