Tesco investor compensation_ what it pays and how to claim – BT money laundering detection

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Investors due compensation from tesco can officially make a claim from today (august 23)

In march 2017 tesco agreed to set up an £85 million compensation scheme for around 10,000 investors who were hit by its accounting fraud and market abuse in 2014.

Brokers with a large number of clients who are potential claimants will be able to help you make a claim.

KPMG, the administrators of the compensation scheme, says this route is preferable as it requires less effort for claimants and will allow any payment due to be made faster.

[read more: tesco investor compensation: are you owed £400?]

The firm is working with brokers representing more than 50% of anticipated claimants, so the majority will be able to make a claim in this way.Money laundering detection

However, investors with brokers with fewer than 100 eligible clients will not be able to get this assistance, neither will those that traded tesco shares or bonds via multiple brokers. Who is eligible?

Tesco has agreed with the FCA to pay compensation to investors who purchased tesco shares and bonds when the market abuse occurred.

The group will establish a compensation scheme for investors who bought shares or bonds on august 29, 2014 up to september 19, 2014 (inclusive).

Details of eligible bonds can be found here.

To claim you will need to be a ‘net purchaser’ so you must have purchased more than you sold by the time the statement was corrected on september 22, 2014.

As mentioned earlier, the FCA estimates there are 10,000 eligible retail and institutional investors who between them purchased approximately 320 million shares during the period and who may be eligible for compensation under the scheme.Money laundering detection how much will you get?

The compensation will pay 24.5p per share plus 1.25% interest for institutional investors and 4% interest for retail investors.

Interest will be paid from september 19, 2014 up to 120 days after the compensation scheme commences. This interest is taxable, although it will be tax-free if your shares were held in an isa or sipp.

Those purchasers who sold all their shares or bonds before september 22, 2014 will not be eligible for compensation as they would not have suffered any loss as a result of the market abuse.

Hargreaves lansdown expects compensation for its retail investors to average £400. How to make a claim

Investors can make a claim directly through KPMG (unless the claim relates to transactions held in sipp) or through their broker.

Below is a screengrab of how the KPMG page looks. It contains all the key resources and deadlines.Money laundering detection

If making a claim directly, these are the steps you will need to go through:

• investors need to supply their personal details and evidence of tesco share transactions to the administrators KPMG;

• you then receive log in details for a claims website from KPMG;

• investors upload evidence of their identity for anti-money laundering purposes onto the claims website;

• then download the discharge form from the claims website, sign and then upload onto the claims website;

• the compensation claim will be processed and then paid in 35 days.

You should check whether your broker offers help with the claims process. You will still receive the same amount of compensation, but it will be much simpler.

This process will avoid you having to submit all your details and evidence of your tesco share transactions directly to KPMG (in step one) and the compensation is paid directly to your account (step five).Money laundering detection

This will be quicker and easier than if you make the claim direct with KPMG. There is no charge for this service and investors will receive exactly the same amount of compensation whichever route they take.

However, if you would like to use the broker facilitated service you will need to supply authorisation to brokers to apply on your behalf pretty soon.

Hargreaves lansdown, for example, says the deadline for its clients is by noon on thursday, july 13, 2017.

If your broker is helping you, your compensation will be paid as cash into the account in which you held the shares or bonds. You can then decide how to invest this money.

Compensation for shares held within an isa won’t be paid directly back into the isa. However, the compensation can be paid in without the amount counting toward your annual isa allowance.

For sipp investments, claims will have to be made by the pension trustees.Money laundering detection compensation will be paid directly back into the sipp and will not be treated as a contribution.

This means the payment will not benefit from tax relief but also not count towards normal annual allowance entitlements.

When the scheme opens, you or your broker will only have six months to submit a claim. Background: how the tesco scandal came about

Tesco plc published a trading update on august 29, 2014, which stated that it expected trading profit for the six months ending august 23, 2014 to be in the region of £1.1 billion.

But on september 22, 2014, tesco plc published a further trading update in which it announced that it had overstated its expected profit by £250 million, mainly because it booked commercial deals with suppliers too early.

The FCA says tesco knew, or could reasonably have been expected to know, that the information in the august 29, 2014 announcement was false or misleading.Money laundering detection

As a result of the misleading information within the announcement, the market price for tesco shares and bonds were inflated, which continued until tesco issued the corrective statement on september 22, 2014.

[read more: this week’s expert share tips − should you buy, sell or hold?] still not clear? Common questions answered

Hargreaves lansdown has put together the following QA that should clear up any areas of confusion.

Do I have to make a claim in order to receive compensation?

Yes. If you do not make a claim, you will not receive any compensation.

How long do I have to make the claim?

Six months from the date the scheme launches, expected to close february 22, 2018.

How will the compensation be paid?

It will be paid as a cash transfer into an account of your choice.

When will the compensation cash be paid?

We are expecting payments to be made approximately 35 days after administrator receives the signed notice of acceptance and release.Money laundering detection

How is the compensation calculated?

Calculations are based on a rate of 24.5p per share for net purchases (buys fewer sales) during the period in question. In addition interest of up to 4% will be paid. This interest is taxable although will be tax-free if your shares were held in an isa or sipp.

I invested in tesco shares in both my isa and general investment account, do I have to make two claims?

No, you will only need to make one claim.

Will compensation that is paid into isa count toward my annual isa allowance?

HMRC isa guidance indicates that it will not count toward your annual isa allowance.

I invested in tesco shares through my sipp how do I make a claim?

Claims for compensation for sipps are being made by the trustees of the pension scheme on your behalf. You need not take any action in respect of a sipp claim it will all be done for you.

However, you should check with your pension company that this is being done.Money laundering detection the compensation will be paid direct into your sipp and will not count toward your annual contribution allowance. HL pension trustees are making the claim for the HL sipp investors.

I bought shares through 2 different brokers do I submit two claims?

You need only make one claim for the total of net purchases.

Can I make my claim through my stock broker?

No, you have to make the claim direct through KPMG