The FSCS is suing Abbey as part of its attempts to rec- over claims that the scheme has paid out to a total of around 1,800 investors who were sold precipice bonds by IFAs which have since gone out of business.
Money Marketing understands that the FSCS is also looking at other product providers and could be using this as a test case.
Abbey had claimed the FSCS was acting outside its authority by trying to recover claims from providers.
But in the High Court last week, Mr Justice David Richards ruled that the FSCS could go ahead with its claim. Abbey has not decided whether to appeal. Pending any appeal, a hearing is expected in May 2009.
The products were promoted by NDF and the court heard that the FSCS contends that “the marketing mat- erial for the products failed to make clear the risks associated with them and that investors were induced to invest in the products in reliance on misleading statements and material omissions.”
The FSCS claims against NDF are for breach of statu- tory duty, negligence and misrepresentation.
The compensation scheme claims that Abbey collaborated with NDF in the development and promotion of the products and in marketing them to investors through IFAs.
Abbey says the plans and promotional material were issued by NDF and that it has no responsibility.
An Abbey spokesman says: “The judge has granted permission for us to appeal to the Court of Appeal in relation to his decision and we shall be reviewing this option in conjunction with our legal advisers.”
NDF managing director Paul Bispham says that the position of Abbey and NDF is that neither firm is responsible for the misselling of the products.
Broker Talkback, p22