FSCS settles up to 103 Keydata claims

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The Financial Services Compensation Scheme has settled up to 103 claims it was pursuing against firms in a bid to recoup some of the compensation paid to Keydata investors.

Law firm Herbert Smith is acting for the FSCS which began legal proceedings last October to pursue negligence claims against advisers who recommended Keydata products, on the grounds that firms breached their duty of care and made false statements about the risk profile and suitability of the products.

Herbert Smith has sent a notification email to serve 103 “notices of discontinuance” detailing the firms which the FSCS is no longer pursuing for Keydata recoveries.

The list of firms that have been served by the notices and therefore no longer being pursued by the FSCS include Barclays Bank, Bluefin Insurance Services, Financial, Helm Godfrey Partners, Jelf Financial Planning, Mint Financial Services, Torquil Clark and subsidiaries of Towergate Financial.

It is unclear how many of the 103 firms listed are no longer being pursued due to bankruptcy or because they acquired a firm with Keydata exposure but did not take on the liabilities.

Among the firms listed are Network Data, a mortgage network that collapsed in 2009, and Park Row, which was wound down in 2010 following an FSA investigation.

The FSCS would not comment on the number of cases it has settled.

A spokesman for the FSCS says: “In compliance with the spirit of the pre-action protocol, the FSCS has had, and continues to have, without prejudice settlement discussions with a number of defendants strictly on a commercial and confidential basis and has, to date, agreed commercial settlements with a number of defendants.

“The FSCS is under an obligation to pursue all and only such recoveries as it considers are likely to be both reasonably possible and cost effective to pursue. The FSCS has good claims against the defendants and has not agreed to discontinue proceedings unless it is appropriate in all the circumstances.”

Money Marketing revealed in August a professional indemnity insurer with Keydata had secured a 60 per cent early settlement discount with the FSCS. In February, the FSCS offered Keydata advisers a 50 per cent early settlement discount on claims of less than £50,000.