Administrator PricewaterhouseCoopers says, on the basis of current information, it believes the £3bn of clients’ funds have been held in secure custody accounts and will look to confirm as soon as possible that assets are secure.
Blue Sky Asset Management, whose plans are administered through KIS, believes client assets will be safe as they are held via Keydata Product Nominees Ltd, which has no liabilities and is not dependent on the solvency of KIS. Keydata’s VCTs are unaffected as they are separate entities.
Moneymarketing.co.uk revealed the company was subject to a tax bill of at least £5m relating to a number of original issues of its defined income plan which were not properly incorporated in Luxemburg five years ago and sold through Isas.
PwC has confirmed that a number of Keydata products may not comply with Isa regulations, highlighting the firm’s Secure Income Bonds issues 1-3 and Defined Income Plans 1-8. It says tax liabilities associated with these products are one factor that led to the administration.
It is understood Keydata was in talks with HMRC on how to pay the bill when the FSA stepped in and applied to the Royal Courts of Justice for the firm to be put into administration on the grounds of insolvency.
Keydata is understood to have offered an alternative plan to the FSA which was rejected. A source close to the firm says: “Had it not been for the FSA’s actions, there would not have been this present uncertainty to consumers.”
Jubilee Financial Products and NDFA have both contacted PwC to declare an interest in KIS, with other bidders likely. Jubilee chief executive Adam Habib says: “I know quite a few institutions used Keydata for administration and it is really the detail of those agreements which will determine how much of the business will remain.
“PwC will have to go through each legal agreement in detail to find out what was paid when, then track records to confirm that cashflows have been made and whether there is more due and then come up with an agreement for each entity that is using Keydata’s administration services.”
The FSA and HMRC refused to comment.