According to a Scotsman report, Keydata was on the regulator’s radar as long ago as 2001 as it was “annoyed” the firm did not offer clear information about the product it was selling in an IFA-sponsored Isa guide.
The report, dated July 30, 2001, quotes an FSA insider who said that major charges and penalties were not highlighted.
It says the guides promoted a so-called “protected” Isa devised by Barclays bank and that Keydata was instructed by the FSA to write to 500 investors who took the guide’s advice and offer them the chance to cancel their investments and be reimbursed.
When questioned on the issue by Money Marketing last week the FSA refused to confirm or deny the report.
Concerns about Keydata’s sales practices reared their head again years later as the regulator was understood to have concerns that the firm’s sales contact with IFAs was at arm’s length on complex products prior to its insolvency.
In June, Money Marketing reported that the FSA was understood to have been worried about Keydata’s outward-bound telephone approach to distribution used by sales staff on more complex products such as those linked to traded life policies.
Keydata is understood to have deployed regional sales staff last year to deal with more complex business with IFAs as a way of addressing the issue.
The FSA confirmed that Keydata’s tax problem came to light while it was already investigating the firm, but would not say when the probe began.
When quizzed in recent weeks about regulatory oversight at Keydata, the FSA says the discovery of non-Isa compliant plans are a matter for HM Revenue & Customs who is responsible for monitoring Isa status.
That may be the case, but if the FSA had concerns about Keydata’s sales practices eight years ago, shouldn’t closer attention have been paid more widely to the firm and its products by the authorities?
And if alarm bells had rung back in 2001, how has it taken eight years for other problem Isa products to be detected?
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