Coutts, the Royal Bank of Scotland-owned private bank, said yesterday it had still not received any communications from a group formed by Nectar loyalty card tycoon Sir Keith Mills to seek compensation for losses linked to troubled insurer AIG.

Coutts, the Royal Bank of Scotland-owned private bank, said yesterday it had still not received any communications from a group formed by Nectar loyalty card tycoon Sir Keith Mills to seek compensation for losses linked to troubled insurer AIG.

Mills launched Coutts AIG Action Group, and its website couttsaigactiongroup.org, last week to seek recompense for investments made in AIG Life Premier Bonds, which offered a higher rate of interest than cash accounts.

He said, in an open letter published on the site, that he and other investors were told the investments were safe but pay-outs were frozen in September. AIG's funding had dried up after investors worried about losses it was making on debt insurance.

If Mills is successful in his claim it could see taxpayer-owned Royal Bank paying compensation to people with enough investable wealth, typi- cally £500,000 upwards, to qualify as a Coutts customer.

Mills himself is thought to have banked around £160m after Loyalty Management Group sold Nectar to Canadian rival Aeroplan for a reported £368m.

A Coutts spokesman said: "Whilst Coutts is very understanding of the client's situation we are confident that the product was sold with the appropriate advice and was compliant with the Financial Services Authority regulations.

"At the time of sale it was made clear that the investment was low risk, not risk free and it was explained that the value of the investment could go up as well as down."

It is thought that all Coutts customers who invested in the bonds, which offered interest of 6.5%, did so as advisory rather than discretionary clients and so had the investments explained to them before purchase.

Royal Bank said it has been trying to negotiate with AIG on behalf of clients and would make loans "at a competitive rate" to clients for up to 100% of the face value of the investment if they needed money in the short-term.

The problem Mills and others have is that their investments in the AIG bonds, which had to be for a minimum of £100,000, are largely frozen.

AIG is offering to allow investors to take half the money out but the remaining sum must be locked up in another fund for two-and-a-half years with only the face value, and not the interest, guaranteed. If they withdraw the cash they faced losing 13% of their total investment.

Although Coutts has only been in Royal Bank's hands since 2000 when it was acquired along with the rest of NatWest, it has Scottish roots. The bank was formed in 1692 by Scot John Campbell and was originally known as Campbells Banks. Its headquarters remain in the Strand in London.

Its most famous customer is the UK royal family.