The Financial Services Compensation Scheme’s legal battle to recoup compensation from Keydata advisers is likely to see AWD Chase de Vere named as one of the lead defendants in the case.
A case management conference has been held this week to determine how the FSCS’s legal action against Keydata advisers should proceed.
It is likely around six lead defendants will be selected, with the remainder of the cases stayed pending the lead cases’ outcome.
Money Marketing understands there are around 500 adviser firms being pursued by the FSCS, relating to about 1,500 Keydata investors. Law firms for the parties are currently agreeing a draft order to be submitted to the judge, who will then issue an order setting out the next steps for how the case will be heard.
The order will not identify the names of the lead defendants, but it is thought AWD will be one of them as it has the largest claim against it.
A spokesman for AWD declined to comment on the case, except to say the company will continue to “robustly defend its position.”
Money Marketing understands discussions at the case management conference have centered on the key issues to focus on to establish whether advice to invest in Keydata was negligent, and the criteria selection for lead cases.
The case appears to be hanging on whether Keydata is deemed to have been a fraudulent operation or not. The FSCS has argued advisers should have carried out a certain level of due diligence before recommending Keydata, but the counter-argument has been that if Keydata was fraudulent due diligence would not have uncovered this.
The FSCS has so far failed to answer questions about whether Keydata was fraudulent. Asked by the judge to address the specific point about whether the company was fraudulent or not, the FSCS replied it did not know. The FSCS was challenged on this point by one of the defendant’s lawyers who claimed the FSCS had carried a statement on its website saying Keydata was fraudulent.
The order, expected in the coming weeks, is likely to require the FSCS to address this point.