A former appointed representative of Whitechurch has succeeded in striking out a legal claim by the network to contribute to the cost of settling with the Financial Services Compensation Scheme over Keydata.
Whitechurch had pursued RGT Financial Services partner Roger Thomas for £37,739 in professional indemnity insurance excess costs.
But Bodmin County Court has struck out the claim after Whitechurch failed to respond to a request for further information on how the alleged debt had been calculated and why the adviser was liable.
The network’s latest annual accounts, filed in August, state it finalised its liabilities with the FSCS in 2013 in respect of the scheme’s long-running legal battle with advisers over Keydata compensation.
The accounts show Whitechurch set aside £704,616 for the settlement of Arch cru and Keydata claims and says it has since received a reimbursement from its PI insurer.
Regulatory consultant Evan Owen, who represented Thomas, said in a witness statement: “The claimant made a commercial decision more than six years ago to accept Keydata products. It cannot revisit that decision simply because the products later turned out to be poor investments or, as in this case, the product provider collapsed into insolvency.
“The mere fact that Keydata products have led the claimant into an expensive settlement with the FSCS and that the defendant introduced some clients who purchased Keydata products (which the claimant had researched and accepted) does not amount to an act or omission by the defendant that could trigger a claim for indemnity.”
Thomas says: “My advice to any adviser in a similar situation is to challenge the network, because if I do not have to pay, why should anyone else have to?”
In May, Money Marketing revealed a group of 19 former and current Positive Solutions advisers had rejected demands from the firm to contribute to the cost of settling with the FSCS over Keydata.
Whitechurch declined to comment.