Adviser firm Financial Escape has agreed a 99 per cent settlement discount with the Financial Services Compensation Scheme over client recommendations to invest in Keydata.
Financial Escape’s annual results to the end of March, now published on Companies House, show the firm paid £400 to the FSCS after agreeing an out-of-court settlement. The FSCS had lodged an original claim against Financial Escape of £64,000, as part of its legal bid to pursue advisers to recoup some of the compensation paid to Keydata investors.
The results say the payment was made “in full and final settlement without acceptance of any fault or liability on the part of the company, its directors or employees”.
Money Marketing revealed the FSCS offered at least one 99 per cent discount on Keydata liabilities in April. The full details of Castle’s discount can be revealed now the firm’s results have been published.
Financial Escape advised 12 clients to invest a total of £120,000 into Keydata, but the FSCS chose to pursue a smaller amount as part of its strategy of offering firms early settlement discounts.
Financial Escape has not received any complaints from clients about its Keydata recommendations.
Financial Escape director Phil Castle says: “Our capital adequacy requirements are only £10,000. We notified the FSA when we received the letter from the FSCS that the legal costs of defending the claim would have exceeded our capital adequacy requirements. That does not seem just.”
An FSCS spokesman says the FSCS must be pragmatic in pursuing its legal claims against Keydata advisers.
The spokesman says: “This does not reflect the FSCS’s views of the merits of the claim, but rather its obligation to only pursue recoveries where it would be cost-effective.”