The Financial Services Compensation Scheme is expecting to recover a total of £75m in its bid to recoup some of the compensation paid to investors in Keydata.
In its plan and budget for 2013/14, published yesterday, the FSCS says it expecting total Keydata recoveries of £75m over the next two to three years. The FSCS has already recovered £28m from Norwich and Peterborough Building Society over its Keydata sales, after N&P was fined £1.4m in April 2011 for failing to ensure advice to invest in Keydata was suitable. The £28m recovered from N&P is not included in the total £75m Keydata recoveries expected.
The FSCS instructed law firm Herbert Smith in October 2011 to begin legal proceedings against Keydata advisers to try and recoup compensation paid to investors. The total legal cost of pursuing these recoveries, and firms who sold structured products and PPI now stands at £22.8m. Money Marketing revealed earlier today Lighthouse is understood have agreed a settlement discount on its Keydata claims of up to 85 per cent with the FSCS.
In its plan and budget, the FSCS says: “We are claiming significant recoveries from both the Lifemark entity and claims against the adviser firms. This requires significant investment in preparing and prosecuting claims against intermediaries in particular, but the FSCS has been keen to apply a commercial analysis to its approach to recoveries in the interests of the levy payers.”
Attain Wealth Management managing director Gordon Crothers says: “If the FSCS is convinced it is the original Keydata advisers that were at fault, it should have started legal proceedings from the beginning. These legal battles now just amount to wasted time and effort.”