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FSCS pays out on some Keydata non-Isa claimants

Some clients with non-Isa investments in certain Keydata plans who said they relied on misleading marketing literature have been successful in their claim for compensation. 

An AWD Chase de Vere secure income bond 2 client and another direct Keydata SIB 3 investor on the Keydata Victims website have been awarded compensation by the Financial Services Compensation Scheme after stating they relied on the brochure’s representation about KPMG in their investment decision.

Deloitte has been quizzing non-Isa SIBs 1-3 investors claiming compensation on behalf of FSCS, asking them to clarify how influential the KPMG representations were.

The FSCS has insisted it is dealing with claims on a case-by-case basis but advisers previously questioned their approach saying only claims for both an Isa and direct investment or standalone Isas appeared to be successful.

In a 2005 SIB 1 brochure, Keydata stated KPMG constructed the financial models used to structure the bond, checked the credit ratings of the insurance companies issuing the contracts and monitored the credit rating of the portfolio of investments. But in a letter to the Keydata action group KPMG chairman John Griffith-Jones dubbed the description “inaccurate and misleading” and said the matter had been flagged to the FSA.   

AWD Chase de Vere senior manager Jason Walker says the fact some of these non-Isa claims are being paid is good news, but warns that other investors should not assume their own claims will necessarily be successful.

He says: “This is a positive development. However it appears they are still reviewing these on a case-by-case basis and so at this stage not all clients can expect to receive the compensation.”   

AWD Chase de Vere is one of eight IFA firms backing a new action group which has formed a fighting fund for possible legal action against third parties to recover millions lost through SLS Capital and Life Settlements Capital.  

The Keydata SLS LSC Investors’ Trust Action Group was recently founded by investor Anthony Lahert and is backed by law firm Addleshaw Goddard. 

AWD says its exposure to SLS/LSC bonds represents less than 1 per cent of the total SLS/LSC funds involved. 

AWD Chase de Vere head of communications and action group spokesman Patrick Connolly is urging other IFAs and clients to register with the group.  He says legal action is likely to cost at least £1m and says the group is looking to work with the FSA and FSCS rather than against. 

He says: “We want and need IFAs to be involved. Our focus is not pinning the blame but about the best way to get money back for investors.”   

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There are 4 comments at the moment, we would love to hear your opinion too.

  1. “KPMG flagged to the FSA that information in the Keydata documentation was “inaccurate and misleading in 2005”!
    So what did the FSA do next to address this point and “protect the investor” and ensure that the “customer was being treated fairly”? Surely this must be a case of the “door has only been closed after the stampede from the stable”!!

  2. Am I the only one who cannot understand any of this?

  3. As authorised firms pay fees to the FSA. If the FSA receive informaion and then fail to correct mis-information and infrom those relying on it or tell those who have misled to inform the IFAs who reccomended the plans that it is innacurate, as mentioned by John Hutton.

    The fact had this been made know would influence both clients and advisers future decisions, is this a breach of a duty of care to the consumer (who does not pay them) or the IFA firms, who have a contract with the FSA drafetd by the FSA as a monopoly and pay the FSA staff’s salaries…..

    TCF, my arse, until the FSA start practicing TAF too, their are doomed to oblivion…

  4. Am I alone in not understanding this situation?Surely if one arranges for deductions to ones salary to be paid in to a pension pot(something the government is always encouraging us to do) this is undoubtedly “savings”. Why, therefore is there any doubt that we should be compensated?

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