The Financial Services Compensation Scheme’s legal battle with advisers over Keydata is set to proceed towards trial.
Following the selection of 15 new lead case defendants last month, at a case management conference today the court ordered that the lead defendants’ legal costs must be shared between all firms party to the proceedings.
There are 63 active defendants remaining, who must share the costs between them. In addition, there are around 20 firms which have not acknowledged the court proceedings and which have now been served a notice by the FSCS to pay their claim in full.
A further case management conference in March will set out the timetable of proceedings to trial. Lawyers close to the case say the trial could go ahead in a year’s time.
Beale and Company partner Damian McPhun says: “There are very good prospects that the case will proceed to trial with a significant number of lead defendants.
“There now remains a core of defendants who are determined to see the matter to trial and to demonstrate the suitability of their advice. They regard the FSCS action as little more than institutional bullying and believe that a positive result at trial will undermine the legitimacy of the whole FSCS recovery action.”
National law firm DWF partner Harriet Quiney says: “The lead defendants have had every opportunity to settle so I suspect they are happy to be lead defendants, and there will be a trial.
“Other firms may still settle though, particularly now they are facing a share of the legal costs.
“This will be a complicated and expensive trial, and a big risk for the FSCS. If it wins it may still struggle to recover the costs from firms.”
An FSCS spokeswoman says: “We can confirm there are 63 defendant firms and today a shared cost order has been granted relating to all of them. Of the 63, 15 will be used as lead cases. No date has been set for trial.”
The long-running saga between the FSCS and Keydata advisers originally required lead defendants to have insurance and legal representation. Firms also had to meet a set of technical requirements based on the claims against them, including having a certain number of both Lifemark and SLS-backed product sales.
But following a large number of settlements, in May the FSCS’s lawyers invited the court to make the following orders: that each defendant with claims worth over £150,000 be a potential lead defendant, and to remove the requirement that lead defendants have insurance and legal representation.
In July, the criteria was further widened to those with claims of between £100,000 and £150,000 against them.