View more on these topics

FSCS is taking action against Keydata IFAs

The Financial Services Compensation Scheme has started legal proceedings against firms which recommended Keydata Lifemark products.

A letter sent on behalf of the FSCS by law firm Herbert Smith to 162 adviser firms says advisers failed to take reasonable steps to ensure Lifemark products were suitable for investors, failed to ensure investors understood the risks involved with Lifemark products or failed to ensure recommendations were clear, fair and not misleading.

The letter says: “Even without having conducted any of his own due diligence, any reasonably competent IFA would or should have known that the Lifemark products were high-risk investments or at any rate higher risk than was appropriate for the relevant investors.”

The FSCS is accusing the firms that recommended Lifemark products of negligence, claiming they breached their duty of care to their clients. It says the firms negligently made false statements about the risk profile and suitability of the products. It is also alleging breach of contract, claiming firms breached their contractual duty to investors to take reasonable skill and care in advising them to purchase Lifemark products. Firms are required to acknowledge receipt of the letter within 21 days and submit responses to the allegations within three months.

An FSCS spokesman says: “We believe that good claims exist against a large number of IFAs.”

In December, the FSCS had accepted 5,200 claims from Keydata SLS investors and paid out £67m. Money Marketing understands the FSCS is looking to pursue a much larger amount from advisers who sold Keydata Lifemark products.

Jacksons Financial Services managing director Pete Matthew says: “I cannot believe anyone who carried out adequate due diligence would have thought it acceptable to recommend Lifemark products.”

Recommended

1

12,000 Pritchard clients warned over cash asset shortfall

Around 12,000 clients have been warned it is “highly likely” there will be a shortfall in their share of £24m of Pritchard Stockbrokers’ cash assets which were recently frozen by the FSA. Special administrator Mazars has written to around 6,000 Merchant Capital clients, where Pritchard acted as custodian, and 6,000 Pritchard direct clients, warning of […]

First class

Reaction to an ATM scam offers a lesson for protection firms

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. Exasperated Me 1st May 2012 at 4:37 pm

    I love a challenge but I doubt I will have the opportunity to assist in the defence of any directly authorised IFAs, the RIs and ARs are another matter altogether.

    The paperwork I have seen to date suggests that the FSCS isn’t in a position of strength, the network ARs and “Partner” RIs are on even safer ground than their sponsoring firms.

  2. What due diligence did Jacksons Financial Services managing director Pete Matthew undertake to come to the conclusion that they were not suitable for any of his clients?
    I’ll show you mine for advising it’s use for about 10% of a portfolio, if he shows his for NOT…..

Leave a comment

Close

Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm

Email: customerservices@moneymarketing.com