Shaun LowthorpeHundreds of people whose life savings were at risk after the collapse of an investment firm are to be offered a financial lifeline as building society bosses move to end uncertainty.Shaun Lowthorpe

Hundreds of people whose life savings were at risk after the collapse of an investment firm are to be offered a financial lifeline as building society bosses move to end uncertainty

Norwich and Peterborough Building Society (N&P) is offering interest free loans which could total up to �2m to 1600 Keydata Investment Services customers left in limbo after Keydata, which is being investigated by the Serious Fraud Office, was forced into administration last year.

Though Keydata is a completely separate entity from N&P, the building society has come under pressure from customers to act because the investment firm had been recommended by financial advisors based at its East Anglian branches.

Last week more than 100 people went to a meeting at Dunston Hall, near Norwich, organised by specialist financial services law firm Regulatory Legal offering advice on how to claim their money back. Six investors also joined forces to create a pressure group to lobby MPs and highlight the issue.

Matthew Bullock, chief executive of N&P, said yesterday that the society had not caved in to public pressure but decided to step in because of the continuing failure of the administrators and financial regulators to work out a compensation plan.

And with some angry customers threatening to take court action, he also insisted the loans were not an indication of any legal liability on its part.

'We can see this has been a very distressing situation and we are therefore stepping in,' Mr Bullock said. 'We are the only party coming in with any funds at all to help our members.

'We want people who come to N&P to know that their money is safe. We are a mutual organisation. Our members are our owners and we have been most distressed by their difficulties. It's right that people are able to pay their monthly bills while we wait for this issue to get resolved.'

Under the plans N&P will loan investors who had between �5,000 and �100,000 in Keydata the same sum they would have received between January, when the payments stopped, and December this year.

Investors will get a lump sum payment covering the period up until this month and then monthly payments after that. The society will cover the costs of any shortfall in payments and the loans will not have to be repaid if no compensation is paid out.

'We have worked hard with a number of the parties concerned to hasten progress and had hoped that by now there would have been an announcement of a proposal for the restructuring of the Keydata investments in Lifemark bonds,' Mr Bullock said.

'It is very disappointing that there has not been more significant progress. In the meantime, we are well aware that some of our customers who chose to invest in Keydata products for income are facing income difficulties, following suspension of their income payments.

'This week, I shall be writing to our Keydata customers whose Keydata income has ceased, inviting applications for an interest free loan to help cover the income payments that they should have received from their Keydata investments this year.

'N&P wishes to be clear that inviting the relevant Keydata investors to apply for this loan is not an indication that it accepts legal liability for the current difficulties with Keydata investments.

'If the relevant Keydata investors decide to apply for the loan, it will not affect their rights to pursue any complaint they may have in relation to their Keydata investment,' Mr Bullock added. 'If they wish to complain about N&P's actions then they should let us have details so that we can ensure that their complaint is properly

investigated.

The majority of Keydata investors are pensioners relying on the savings plan as part of a vital retirement nest egg and the collapse raised fears that many could struggle to make ends meet.

Norwich and Peterborough said the loan is to be made available to anyone who has fallen into income difficulties following the suspension of income payments by Keydata, but is not for capital investors.

'We continue to work with the FSA and with the administrators of Keydata to seek an early resolution to this issue and we have informed them of this initiative.'

A 71-year old investor from Aylsham, who did not want to be named, said he had lost out on nearly �500 a month after investments worth more than �70,000 for both himself and his wife stopped paying out.

'It's been horrendous, we haven't slept and both had to go to the doctors,' he said. 'We have just managed to keep our heads above water.

'The gentleman at Norwich and Peterborough said we could get our money back, but we didn't realise it was going to drag on for so long. We took it out in good faith, it was low risk and then this happened. The FSA should give us our money back.'