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FCA fines Chase de Vere £560k over £50m Keydata investments

Chase de Vere has been hit with a £560,000 FCA fine for failures surrounding the sale of Keydata products.

Between August 2005 and June 2009, Chase de Vere’s advisers sold Keydata life settlement products to 2,806 customers who invested a total of £49.3m.

The Financial Services Compensation Scheme has paid compensation to eligible customers up to the scheme limit, which was £48,000 per customer at the time. However, the regulator says 139 customers invested a total of £4.4m over the scheme limit and the majority of these people may not recover the full losses arising from their investment.

The FCA says Chase de Vere did not research the Keydata products well enough to understand the risks they posed to customers and did not ensure that its advisers understood those risks.

As a result, the advisers did not explain the risks of investing in Keydata products properly to customers, and the firm made this worse by ceasing to provide standardised wording to advisers to help them describe the risks to customers.

As a result, Chase de Vere failed to disclose to its customers certain distinctive features and risks of the Keydata products in a way which was clear, fair and not misleading.

FCA director of enforcement and financial crime Tracey McDermott says: “Firms need to ensure that they fully understand and explain to customers the risks of investing in the products they are offering. That includes researching the products thoroughly before they decide to offer them and ensuring advisers have the tools they need to explain the risks to customers.

“Chase de Vere failed to do this, leaving its customers without a full understanding of the risks they were taking by investing their money in Keydata products.”

Chase de Vere chief executive Stephen Kavanagh says: “We are very disappointed to have been fined. However, it is important to put this into context.

“The shortcomings identified were addressed and rectified some years ago. The FCA itself has, in its final notice document issued today, identified the improvements in our business quality monitoring, sales practices, systems and controls, product research, management information, compliance monitoring and complaints handling.

“The Chase de Vere business of today is one with robust systems and controls, where highly qualified and professional advisers deliver good quality independent financial advice and service to our clients.”


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There are 13 comments at the moment, we would love to hear your opinion too.

  1. Were these life settlement products or SCARPS?

  2. Michael.White.BoutiqueCapital - Bridging Loans 17th November 2014 at 10:53 am

    Oops! …………. I wonder how many of the errant consultants who sold the products are still with Chase?

  3. Julian Stevens – these were life settlement products – all of Keydata’s structured capital at risk products performed as they should have done – and ironically have been amongst some of the best performing of all such products in the sector

  4. ‘The FCA says Chase de Vere did not research the Keydata products well enough to understand the risks they posed to customers and did not ensure that its advisers understood those risks.’

    The main risk being that the FSA was not doing its job properly regulating Keydata.

    Let’s face it, if it says ‘authorised and regulated by whatever the half a billion pound annual budget regulator is called this week’ we should be able to trust that its documentation is accurate and that its business is being carefully monitored.

    It must be great to have all that money and absolutely no responsibility. Even better if you can blame and fine other people for your failures.

  5. The FCA Final Notice should be read. AWD Chase de Vere has suggested that the blame for advice that caused losses should be attributed to advisers who have left AWD. The Final Notice shows that this is simply not the case. The Final Notice pins the blame firmly on AWD Chase de Vere itself.

    It is also clear that a number of clients have not received full compensation owing to the FSCS limit.

    If anyone is interested in forming an action group to pursue these matters Justice in Financial Services would be willing to assist – contact

  6. Still waiting for the FCA to conclude its enforcement proceedings against Ford et al – over 6 years now!!!

  7. Left hand not knowing what right hand is doing vis-a-vis Mr Percival statement about Suitability letters etc etc?
    How can we do what they want when two parts of the same organisation is stating not enough is being done to demonstrate x y or z was covered off etc?

    MM perhaps you would like to ask Miss McD and Mr P to do a joint MMTV interview to try to explain how we can shorten the SL to make it more engaging but still protect ourselves? Now that would be an interview to see

  8. Why did the life settlement funds fail to provide the level of income to make the plans work successfully? How do you research actuarial miscalculation and future fraud?

  9. @Julian Stevens: According to the FCA’s final notice, the Keydata Products combined life settlement funds with the form of a structured product. The products were more like ‘capital protected’ structured products, rather than SCARPS, because they aimed to return capital in full at the end of the term. But just like ‘capital protected’ structured investment products, they did not guarantee this. The FCA says they were different to typical structured products because their structure did not involve a derivative, and the returns they sought to achieve were not linked to an index but to the proceeds of a portfolio of life policies. Keydata invested in offshore bonds, and the offshore bond-issuers invested in traded life policies.

  10. It’s interesting that the words “Miss-sold” and “Unsuitable” are nowhere to be seen in the Final Notice.

    Chase de Vere is not being required pay any redress (and no mention is made of redress being paid).

    The FCA does not question the suitability of this advice.

    It is the firm’s systems and controls that is the main point of attack and then the disclosure and suitability letters that (in a few cases) were not clear, fair and not misleading.

    One potential conclusions from this is that the FCA decided they were going to go for Chase de Vere no matter what they found (and when in doubt you can always make the Systems & Controls charge stick).

    Another is that Chase de Vere gave in to some of its advisers who pushed for these products to go on the approved lists and who then made hay whilst the sun shone. (The final notice says Chase have 182 advisers. 3826 of these products were sold over the space of early 4 years. That’s roughly 5 products per adviser per year).

    I genuinely don’t know what to think. If it’s the case of the former then I would have some sympathy with Stephen Kavanagh’s statement.

    If it’s the latter, then this is a lesson for the owners and management of every advise firm.

  11. A reminder that as part of many firms research they looked at the report from Dr Debbie Harrison who after the collpase of Keydata secured a position on the Financial Services Consumers Panel. I questioned the FCA and FSCP over her appointment, but was fobbed off.

    I quote from the report “About the author Debbie Harrison is a SeniorVisiting Fellow at the Pensions Institute, Cass Business School, where she is a researcher and the co-author of four landmark pensions reports. Elsewhere she has published a wide range of UK and global retail and institutional finance books and research reports and has been a contributor to the FinancialTimes on pensions,
    investment, alternatives and expatriate issues for 20 years. In addition Debbie is a consultant to major financial institutions and also runs financial training courses for institutions and government departments, including the Department forWork and Pensions, HM Revenue & Customs, and the Office for National Statistics. She is a trustee of the Financial Inclusion Centre, a financial research charity, and she is an adviser to the DWP on pension reform.
    Keydata commissioned Debbie to write this product review.The firm provided technical assistance but she retained editorial control throughout. She is happy to discuss any issues arising from this research and can be contacted at ……”

    Her report will have influenced MANY advisers as to the level of due diligence she was able to do, that a small firm could not and yet there has been NO discussion of the Keydata debacle reported despite her statement that she was happy to discuss issues when the plans were being sold and is happy to be a (paid)guest speaker on other financial matters, but keeps VERY quite about anything to do with Keydata or Life settlements.

  12. I have added a further extract from Dr Harrison (member of the FSCP) report and one should note that viewing the details of the portfolio construction was viewed as commercially sensitive and whilst it could be argued Chase De Vere should have visited their offices and checked it out, the FSA had actually visited Keydata and so had Dr Harrison and no irregularities had been identified. Keydata was a firm authorised as a PEP and ISA manager as well as being authorised to handle client money so had to have jumped through many more hoops with the FCA and GHMRC to gain these permissions than Chase De Vere and any small IFA.

    Lets just remember why the FSA stated they took action on Keydata originally and that was due to a failure to construct the ISA’s correctly so that the investments being held in them were eligible for ISA treatment, not the stealing of over £100 million from under the custodian and FSAs noses, nor for the failure to get authentic and accurate life expectancies of the polies insured’s nor anything else. This is a clear case of pandaoras box being opened after the event and all the missed regulatory and custodial professionals failing to do what IFAs and their clients expected of THEM, not the other way round.

    One has to ask who has access to the details of the portfolio construction and whether it would have truly achieved it’s aims or whether there were flaws that should have been picked up and if so, by whom?


    3.The experts behind the Secure Income Plan Keydata, which is authorised and regulated by the Financial Services Authority, is the promoter of the Plan, the administrator, and the PEP and ISA manager. In this role Keydata has overall control and management of the Plan and receives regular reports from third parties.The most important third parties to the Plan include:
    • Legal advisers, who establish the contracts between the parties and provide legal opinion so that the arrangements in place are best practice.
    • The US-based life settlements sourcing agent, which is responsible for the selection and purchase of policies in accordance with the formal investment criteria agreement.
    • The US investment bank, which holds the policies as trustee to the Secure Income Plan.The bank is also responsible for ensuring the premiums are paid and claims are processed when a policy matures.
    • The US tracking agent, which maintains contact with the original policyholders and informs the bank when the policyholder has died and therefore when the bank can process the claim.
    • The Luxembourg custodian, which oversees the issue of the bond.The custodian has a minimum ‘A’ rating by Standard & Poor’s.The application of double tax treaties avoids taxation on funds remitted from the US bank to the Luxembourg Custodian
    Following regulatory best practice guidelines, Keydata’s product literature does not disclose the names of the third parties involved, as to do so might be construed as an endorsement on the part of these organisations. Nor does it describe the portfolio construction explicitly due to the sensitivity of the intellectual capital. However, these details are available should advisers wish to arrange a one-to-one meeting with Keydata

  13. @Tim Page. Taking a quick look at the Ombudsman Decisions web site and searching for ‘Keydata’, there are quite a few Chase de Vere advice cases amongst them where the Ombudsman has upheld the complaint and awarded compensation.

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