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FOS upholds 93% of Keydata complaints against advisers

The Financial Ombudsman Service is upholding 93 per cent of Keydata complaints taken to decision stage against advisers for unsuitable advice.

Since April 1, when the FOS began publishing its final decisions, the ombudsman has upheld 53 Keydata cases against advisers and rejected just four. The cases relates to more than £1m invested in Keydata and involve up to 30 advisers. 

Cases only comes to decision stage if it is challenged by one of the parties involved with the vast majority of cases resolved at adjudication stage.

Every Chase de Vere case that has gone to the FOS decision stage since April has been upheld. The firm had the most Keydata complaints overall, with a total of 13, or almost two a month, relating to at least £500,000 in client investments.

Care Asset Management had four complaints upheld on Keydata investments worth nearly £150,000 while Positive Solutions saw three Keydata complaints upheld with one case concerning a Keydata investment of £230,000.

Lighthouse Advisory Services saw two Keydata complaints upheld.

Some advisers were not named in the decisions and not all the investment amounts were disclosed. Some complaints were made by solicitors on behalf of an estate because those involved had since died.

Around 30,000 investors lost £450m when Keydata collapsed in June 2009. Many have claimed from the Financial Services Compensation Scheme, which has separately sought to recoup money from advisers.

The FOS says it has received about 100 complaints against advisers for Keydata advice. It says each case is taken on its own merit.

Forty Two Wealth Management owner Alan Dick says: “There has been significant unsuitable advice and people have to be compensated to restore trust in financial markets. I am surprised at the high uphold rate because my experience of the ombudsman is it is a complete lottery.”

Chase de Vere head of communications Patrick Connolly says: “We would not have fought the cases if we did not have good reasons for doing so.”

Care Asset Management, Positive Solutions and Lighthouse declined to comment.

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Comments

There are 11 comments at the moment, we would love to hear your opinion too.

  1. Andrew Pritchard 9th October 2013 at 10:29 am

    Ok, so the FOS is upholding a large proportion of Keydata cases, and the FSCS is suing advisers to get the compensation money back from them. If the FOS found in favour of the advisers then the FSCS case would be seriously undermined. The FSCS would then have a problem redressing the money it paid out.

    Although the FOS and FSCS are independent of each other, they both have the same master, so why should this information come as any surprise to advisers.

  2. Andrew Pritchard | 9 October 2013 10:29 am

    You beat me to the response because a blind man on a galloping horse can see no other outcome.
    The die has been cast so why would anyone want to rock the boat?

    Independent of each other? Yeah right…..!!!

  3. As ever not all is at it seems.

    I and many others only had very few with KD and a great many (including me) received no complaints at all. Therefore the FOS wasn’t involved. So the headline only refers to those cases where a complaint was lodged. What percentage was that of the total? Why didn’t the firms in these cases help their clients to obtain redress from the FSCS – after all the figures point to an average of £30k – which was the FSCS limit at the time.

    In view of the fact that the FSCS paid out it logically means that the firm – in this case KD – was in default. All 3 of my clients got all their money back.

    In which case one wonders why advisers are being chased at all? Is this becoming a habit? (Arch and KD). Advisers carrying the can for providers (who are also regulated – so it would seem) messing up. The money was paid out – not because advisers defaulted – but because the provider did. Moreover it defaulted in this case as a result of a criminal act.

  4. It’s questionable whether any adviser should be held liable for the collapse of an FSA regulated company. If the FSA can’t see it coming why should an IFA with comparatively tiny resources be able to spot it.

    A court would understand this argument but the FOS is not a court and gives the outcome that the regulator wants.

    Be afraid, be very afraid, because YOU will always be liable whenever anything goes wrong.

  5. Has anyone actually digested the figures shown in this article?
    30,000 people lost money. There were 100 complaints against IFAs, of which 93 were upheld. That equates to 0.31%
    If that is not a vindication of the worth of IFAs I fail to understand what is.
    Is this not the Press looking the wrong way once again.
    Why is the FSCS claiming money from Advisers when so few clients appear to be dissatisfied with the advice given.
    Yet again fairy tales abound within the Financial Services. How about some solid facts and solid analysis.
    Then perhaps IFAs could band together and sue the FSCS for slander.

  6. @ Glen

    One of the points I was trying to make. Thank you for making it so well.

  7. Keydata was a regulated firm as was Lifemark. Had both regulators actually done their job properly, no loss would have occurred. If all parties had met their responsibilities and their statements and commitments in the CONTRACT the consumer would have got what was expected, I.e an uncorrelated asset class with a fixed income and a probable return of capital at the end of the period (it never was guaranteed to return the capital) . Dr Debbie Harrison of CASS business schools who is often quoted in MM wrote a glowing report of the product BEFORE its collapse, but rightly mentions d a caveat about only using a modest proportion of a clients total portfolio I.e asset allocation to spread risk.
    Let’s wait for the actual court cases shall we?

  8. Yes Phil – so right. But I fear that the court case is already a done deal. I cannot envisage anything going against the Regulator and the FSCS. The fall out (for them) would be truly catastrophic.

    The mere fact that they continue on this course confirms that they have fixed the result.

    Shocking? Cynical? Maybe, but realistic nonetheless. Perhaps your grandchildren will ultimately learn the truth one the documents become available in 50 years time.

  9. in 50 years if the truth comes out I will be 98 and there is no longstop on revenge and not a lot they can do to a 98 year old.

    If no case ever gets to court, justice will not have been seen to have been done.

    If it gets to court, whatever the finding, I suspect the judges summing up to be very interesting and could help advisers to fight to correct the system in the future.

  10. Well at least you’re up on me. In 50 years I’ll be dead! (Well before that!)

    “Justice seen to be done”. Are you kidding! I’m surprised an IFA still has that phrase in his lexicon.

    There ain’t no such thing – in or out of financial services.

  11. If the case goes to court we can see from the judges deliberations where the FSCS have used any loopholes to win their case and adjust accordingly and so can PI insurers. At the moment we all have uncertainty/anarchy with FOS &FSCS and not the rule of law.

    a the answer may be like the banks to have a work to rule and take on no new clients on an advised basis, only advise existing ones.

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