Fight goes on as FSCS rejects protests and increases levy
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The Financial Services Compensation Scheme has rejected the adviser outcry which accompanied the Keydata levy and has increased the interim levy to £80m to pay for claims relating to Lehman-backed structured product providers.
Aifa says it is awaiting legal opinion on the chances of overturning the FSCS’s decision to impose an £80m levy relating to Keydata, two stockbrokers, NDFA, Defined Returns and Arc Capital & Income.
Director general Chris Cummings says: “We are looking at two aspects. First, has the FSCS observed due process? It seems they have, which is unfortunate. The wider issue is in terms of a regulatory failure by the FSA to subject Keydata to sufficient authorisation checks and ongoing supervision - were they failing to portray themselves in a clear, fair and not misleading way?
“This is so obviously a bill the IFA community should not be paying and puts in doubt the operational legitimacy of the compensation scheme.”
Regulatory Legal says it has around 130 advisers signed up to launch a judicial review against the decision, but it may require 1,000.
Partner Gareth Fatchett says: “The decisions made by the FSCS show scant regard for the actuality of what happened. The industry needs to show it has the stomach to fight this grossly unfair levy.”
Fatchett says advisers would have to pay between £200 and £300 to help launch the action, depending on size. He says if Aifa decides to launch an action he will add his members as interested parties to Aifa’s cliam. He says if Aifa does not launch a claim then he will launch a lead claim.
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Readers' comments (2)
Anonymous | 1 Apr 2010 4:09 pm
You sell these products - you are responsible for ensuring they are what you say they are! The fact that you use the product suppliers sales literature is not a defence. You had the opportunity to provide alternative negative news which you knew was available, but you chose not to do so. Therefore you are technically just as responsible for the failure of these products. Why do you not accept that responsibility, as you would acceopt the commission?
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Mis-sold investor | 4 Apr 2010 6:21 am
This squabble is delaying things for the c3000 people with 'capital at risk' products from DRL, NDFA and ARC. It also seems FSCS cannot afford risking the levy to exceed £100m this year because of the potential fall out with the funds managers. What a mess! Meanwhile, the people who are supposed to benefit from the scheme are kept waiting. You can read more at www.missoldinvestments.co.uk
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