The Financial Services Compensation Scheme is offering firms settlement discounts of up to 90 per cent in its legal battle with advisers over Keydata.
In a letter to firms, seen by Money Marketing, FSCS lawyers Herbert Smith Freehills has offered firms with claims of less than £100,000 a settlement discount of 90 per cent.
It is understood HSF has also written to firms with claims of less than £50,000 offering a discount of 80 per cent.
The letter says: “In order to consolidate the group of remaining defendants in the proceedings at this juncture, and for commercial and pragmatic reasons, the FSCS is prepared to accept 10 per cent of the total value of the claims from the defendant.”
The offer is open until 12 September.
The FSCS is continuing the process of selecting new lead case defendants, after widening the criteria at a case management conference in July.
At the conference, an order was approved which meant firms claims of between £100,000 and £150,000 could be selected as lead cases. There are 32 firms which fall into that category.
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 at a case management conference in May, HSF 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.
The court is expected to select 15 or 16 lead defendants in early October.
A source close to the case says: “The FSCS is trying to pick up settlements wherever it can, either with a view to focusing on the lead defendants or packing up the whole case.
“There remains a number of firms which feel so strongly about the case that they are not prepared to settle, even at these low levels.”
An FSCS spokeswoman says: “The FSCS is committed to pursuing recoveries where it is reasonably possible and cost effective to do so.”