Investors knowingly misold worthless bonds may be able to claw back more of their cash from administrators, following an initial compensation payout.
The Financial Service Compensation Scheme said the administrator of Catalyst Investment Group, which was declared insolvent in 2013 after being found to have sold illegitimately issued bonds, was preparing to make its first payout from what it was able to recover from the firm.
The FSCS said it was not clear how much cash would be returned, however. Around £59 million has already been paid out in compensation to around 3,500 claimants.
'FSCS expects to receive approximately 89% of this dividend under our assigned rights,' it said in a statement.
'The FSCS is considering what additional payments will be due to claimants. We are working closely with the administrators to understand how the dividend is broken down, and the individual calculations will be quite complex.
'As a result, we cannot say at this stage how long it will take us to complete the calculations and make additional payments.
Catalyst was due to be served with a £450,000 Financial Conduct Authority fine when it was declared in default four years ago.
The business was found to have promoted debt securities offered by Luxembourg-based ARM Asset Backed Securities despite knowing that the bonds were illegitimate, having not been approved by the local regulator
UK investors had put almost £54 million in ARM bonds, including £17.1 million in unissued ARM bonds.
ARM's business was suspended in 2009 following Luxembourg regulator CSSF’s decision not to authorise the bonds.
Its appeal against Luxembourg's financial authority was rejected in 2013 at which point BDO was appointed as ARM's provisional liquidator.