Norwich and Peterborough promises to repay all money lost by Keydata investors
Thousands of people who lost their life savings after investing in Keydata on the advice of the Norwich and Peterborough Building Society will be compensated in full.
Around 3,200 of the building society's customers lost more than �53m when the investment firm Keydata later went into administration in the summer of 2009.
Across the UK there were 30,000 people affected, who had invested a total of �450m.
Now, almost two years later, Norwich and Peterborough has agreed to repay them in full - with an average figure of almost �17,000.
The move will cost the building society more than 40 times its profit from last year.
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Alison Rolls, head of communications at the Norwich and Peterborough Building Society said yesterday that claims from all customers would now be repaid in full.
'It's not just people who've complained, it's everybody who invested in Keydata following advice from us,' she said.
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'This is what we've been working towards for a very long time.'
'We're very sorry its taken so long and we thoroughly understand the anxiety this long wait has caused.'
The building society has put aside a provision of �57m, which will cover the outstanding �53.9m owed to investors, as well as lost interest.
But the building society could not say how long it would take to repay all customers, warning only that it was a 'complicated and complex' process.
People were advised yesterday to wait for a letter from Norwich and Peterborough, rather than contacting them directly.
Hundreds of customers had already filed complaints with the building society itself after Keydata collapsed, while hundreds more opted to be represented by the law firm Regulatory Legal in a complaint to the Financial Ombudsman Service (FOS).
Some compensation had been received by customers, but most remained fearful that they would never see their money again.
The Financial Services Compensation Scheme (FSCS) ruled last year that it would compensate some customers up to �50,000, despite Keydata being sold via a firm which was based in Luxembourg, outside the jurisdiction of the authority.
However, those who had more than �50,000 invested were not covered for the full amount of their capital.
And hundreds of people who signed up with Regulatory Legal will only receive 90pc of their compensation after a fee is deducted by the firm.
Carol Schole, a 65-year-old retired grocery store owner from Wisbech, had invested the money from the sale of her business in Keydata to provide an income during her retirement.
She had �260,000 invested and had joined the case put together by Regulatory Legal.
She said she was relieved by the news of the payments, but had lost trust in financial institutions and would not relax fully until the money was back in her bank account. 'It's been a horrible time,' she said.
Gordon Horsfield, chairman of the society said that compensation would be made as 'ex gratia' payments, meaning that the society will not admit liability for mis-selling.
The institution also denied yesterday that the payments had been announced in order to facilitate a merger with the Yorkshire Building Society.