National IFA Chase de Vere made an £11.2m pre-tax loss in 2012 after setting aside £14.4m to cover the costs of its Keydata legal battle and compensating clients sold Arch cru and payment protection insurance.
Accounts for the year to 31 December, published last week, show Chase de Vere incurred exceptional costs totalling £14.4m last year, including £700,000 for Arch cru redress, £300,000 for PPI compensation and £600,000 for the firm’s FSCS levy for 2012/13.
The company is also involved in a review, started by the FSA in 2011, relating to “certain regulatory matters”. Chase de Vere declined to explain the nature of the review but has seen fit to refer to it as a potential future liability.
Chase de Vere is expected to be named one of the lead defendants in the FSCS’s legal case to recoup compensation paid to investors from advisers who recommended Keydata.
The extent of the legal costs and the uncertainty over the case’s outcome has seen Chase de Vere secure a letter of support from parent company Swiss Life to vouch that the company has enough funding to continue to operate.
In 2011, Chase de Vere made a pre-tax profit of £1.3m and recorded exceptional costs of £2.1m.
Chase de Vere chief executive Stephen Kavanagh says: “We have previously acknowledged the impact which some legacy issues could have on our short-term profitability. In line with this we made a provision in 2012 to provide for a number of such legacy issues and associated legal costs.”
Philip J Milton & Company managing director Philip Milton says: “The level of provision for the Keydata case almost seems to suggest Chase de Vere expects to pay out. These numbers are a sad indictment of the company’s affairs.”