MM Leader: Shining a light on role of FSA

The Keydata saga took yet another twist last week when revealed the firm’s founder Stewart Ford had been granted a judicial review into the FSA’s investigation.

In a strongly worded statement, Ford said he has “serious concerns” about the way the investigation was conducted and suggested the FSA should be held accountable for its “illegal conduct”.

The FSA is at an advanced stage of its investigation into Keydata. It is likely to take the strongest action possible against anyone associated with the failure that it finds culpable.

Judging by the amount of money Ford made from Lifemark and Keydata, he is not short of cash and it is likely a High Court battle, and any resulting appeals, could see the FSA’s conclusion delayed for a considerable time.

Any delay in truly getting to the bottom of who was to blame is regrettable but the judicial review may shine a useful light on the role of the regulator. Ford and the other directors of Keydata certainly have some serious questions to answer regarding their responsibilities for what occurred at the firm and the two investment vehicles, Lifemark and SLS Capital.

But it is also right that the role of the regulator, which has had such a dramatic impact on proceedings, is examined to ensure it conducted itself properly.

An independent review of the Keydata debacle, examining the role of key players, including the FSA, is the preferred route to getting all the answers IFAs and investors want. But until this is commissioned, the judicial review may offer a useful platform.

The FSA will be hoping its blunder of leaving a sensitive report into Keydata with the neighbour of the firm’s director Mark Owen is an isolated incident and not indicative of other mistakes Ford will look to expose in his judicial review.

Low point

The Pension Protection Fund has this week confirmed that it will include the investment risk of a scheme’s portfolio when calculating levies.

The idea of risk-based levies should be fed into the FSA’s upcoming review of the Financial Services Compensation Scheme to help ensure that decent low-risk IFA firms pay less for the mistakes of other higherrisk sectors.