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