The Financial Ombudsman Service has described investing in Keydata’s Lifemark as “gambling” in a ruling against an IFA who invested a client in the firm.
On September 1, the FOS told the IFA to return £44,000 to executors of the estate of an elderly investor who had 31 per cent of her savings placed in the Keydata secure income plan.
The ruling, seen by Money Marketing, says: “The Keydata investment appears to be dep-endent on the yields obtained from the trading of ’secondhand’ US life insurance policies. In simple terms, investors, principally, are gambling on the longevity of the insured and on the administrators of the sch-emes’ ability to predict that.”
The ruling follows a FOS adjudication in late August that called for Norwich & Peterborough Building Society to repay £28,000 to an elderly Keydata investor. The society is appealing against the decision.
Another ruling earlier this month found that AWD Chase de Vere should repay a client their Keydata investment because the adviser over-exp-osed the client. AWD is also appealing.
Regulatory Legal consultant Michael Cotter, who is acting on behalf of Keydata investors, says: “This adjudication is very clear. Many IFA firms have exposed their clients to significantly more risk than the 20 per cent level in the Chase de Vere adjudication and the 30 per cent level mentioned in this adjudication. If that is the case, then a suitability allegation would succeed.”