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Categories:Advisers

Keydata casualty bought out of admin- up to £6m costs stay with FSCS

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Target Financial Management has been bought out of administration by Million Plus Financial Planning, an IFA firm led by former TFM managing director Mike Cleary.

Last week, Money marketing revealed TFM was entering administration after the Financial Services Compensation Scheme had pursued the firm over claims relating to Keydata.

The FSCS is chasing the firm for £1m in claims relating to Keydata’s SLS products but administrator PricewaterhouseCoopers says the firm’s total exposure to Keydata claims is £6m.

It is understood Million Plus FP bought the firm for a minimal sum. It will not be taking on any liabilites.

Cleary was the managing director of TFM between September 2010 and June 2011. He was previously a director of Foster Denovo and was chief executive of Berry Birch & Noble Financial Planning between 2003 and 2005, before the firm’s permissions were cancelled due to capital deficits. BB&NFP was placed in default by the FSCS in 2008.

The FSCS will now have a claim on any remaining TFM assets as an unsecured creditor but any payout is likely to be small.

In October, law firm Herbert Smith wrote to Keydata distributors on behalf of the FSCS to kick-start the legal process of recouping compensation paid to Keydata claimants relating to SLS products.

In January, the FSCS imposed a £326m interim levy on the industry, mainly to cover claims relating to Keydata Lifemark products. Advisers paid £93m while fund firms paid £233m.The FSCS has not begun attempting to recover Lifemark payments yet.

The deal means TFM’s client book, regional offices and associated trail commission will pass to Million Plus FP. The firm says it is negotiations to re-employ a number of TFM’s staff and has agreed to pay their November salaries.

Better Capital chairman Jon Moulton and Largemortgageloans.com managing director Paul Welch are investors in Million Plus FP.

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Readers' comments (17)

  • Disgraceful.

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  • so a firm that has failed due to its inability to meet its financial commitments, in addition to the keydata liabilities, has been bought by a man who ran a firm that was shut down due to capital deficits.
    Yep, I reckon RDR has been a huge success!

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  • Begs the question as to how or why the FSA would even think of granting any type of authorisation. If they do or if they already have then it makes a total mockery of the entire system. But then Hector has never been responsible for any of the mistakes made within the FSA in his tenure or am Ibeing a bit harsh???

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  • This is shocking. How can he be allowed to do that?

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  • PWC obviously marketed the assets to ensure the best price was obtained for creditors...


    ...and the FSA will take what action against the individuals involved.....

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  • Anonymous - what has this got to do with RDR?

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  • Yep, Cleary seems to be associated quiet abit with faield firms....

    ....Perhaps the FSA should consider someone's history when approving someone?

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  • FIT?

    Probably, done nothing illegal, just par for the course. Did Tawdry Law do something similar?

    Come to think of it the regulators keep doing it, going to do it again soon.

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  • In such circumstances, why can’t the trail commission be purchased by the companies providing trail, in exchange for a lump sum, or lump sums in tranches maybe. Could be a much cleaner way of resolving such matters in the future, unless of course the FSA’s focus on our trail commission earnings continues to blinker their view.

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  • God, I wish I could dump all my commitments on the rest of the industry.

    Not that I consider the Keydata farce the responsibility of anybody other than the FSA.

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