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Compensation scheme opens for victims of Tesco’s accounting scandal

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23/08/2017
Administrator KPMG has confirmed the launch of the Tesco compensation scheme for investors, which will be accepting claims until 22 February 2018.

Around 10,000 Tesco shareholders are entitled to compensation following mis-statement of its financial position in 2014. Compensation is set at a rate of 24.5p per share plus interest of 4% for retail investors.

The scheme was announced by Tesco PLC with the agreement of the regulator, the Financial Conduct Authority (FCA) on 28 March 2017, and relates to Tesco’s trading statement of 29 August 2014 regarding its profit outlook for 2014/15. This outlook was corrected on 22 September 2014.

Investors who bought Tesco PLC shares or certain Tesco listed bonds between 29 August 2014 and 19 September 2014 are eligible for the compensation. Claims can be made via this KPMG Tesco compensation link.

Claimants will lose any right to compensation under this scheme if they do not submit their claim by the 22 February 2018 cut-off point.

Hargreaves Lansdown has been one of a number of stockbrokers working with KPMG to facilitate a claims process that is easier and simpler for their clients. However, brokers can no longer help with claims and investors must now claim directly through the claims portal KPMG has put in place.

Hargreaves Lansdown has been able to help 1,711 investors (724 SIPP and 987 non-SIPP claims) with their compensation claims.

‘Final chapter in the accounting saga’

Danny Cox, chartered financial planner at the firm, said: “Compensating investors is the final chapter in the accounting saga and Tesco is keen to put this episode behind them, especially as CEO Dave Lewis has got the business moving in the right direction despite challenging market conditions. Stronger trading, particularly in the UK, means that after a two-plus year absence, Tesco is planning to restore its dividend this year.

“Investors who have not yet made a compensation claim are now on the clock to submit their claims or receive nothing.”

Hargreaves points out that compensation is paid differently in respect of shares held within ISAs and SIPPs. Compensation for Tesco shares/bonds held in an ISA is not paid directly back into the ISA. However the compensation can be paid in without the amount counting toward the annual ISA allowance.

In the case of SIPP investments, claims must be made by the pension trustees and no action is needed by the investor. 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 will not count towards normal annual allowance entitlements.

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