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FSCS recoups £52m through Keydata legal battle

The Financial Services Compensation Scheme has recouped a total of £52m through its legal battle against advisers who recommended Keydata products.

In an announcement posted on the London Stock Exchange today, the FSCS says it has secured £122m in total recoveries relating to the collapse of Keydata. Once the costs of pursuing the recoveries is taken into account, the scheme has clawed back a net total of £102m.

The FSCS has paid out a total of £330m in compensation to Keydata investors since the firm went into administration in June 2009. 

The compensation scheme says its legal challenge against Keydata advisers took into account their ability to pay, and it did not pursue claims “simply to force firms to go bust”.

FSCS chief executive Mark Neale says: “We have a duty to pursue recoveries where it is cost effective to do so. We take that duty very seriously.

“It benefits the industry by returning money to the firms that pay our levies. We have achieved £122m in recoveries so far. That figure dwarves the overall costs of achieving them. In fact it does so by a margin of more than five-to-one. That’s good news for the firms that pay for FSCS protection.”

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Comments

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

  1. Of course it is entirely beside the point that:

    a) Failure was in the major part due to a criminal act
    b) That Key Data was in fact a provider and not an adviser
    c) that the methodology relied on bullying tactics as the costs of defending would have outweighed the cost of the FSCS claim for those advisers that only had a small exposure
    d) That the Regulator itself was seriously lacking was entirely overlooked
    e) That the legal firm working on behalf of the FSCS got away with murder. Serious breaches of data protection were met with a slap on the wrist.

    This sets a dangerous precedent. Basically in many cases recovery was nothing more than blackmail. Admittedly this does not exonerate all firms, but some who could in normal circumstances have shown that they had done all that was necessary and in fact were blameless, were caught in the mincer.

  2. On one hand I am pleased they are recovering some money (I will add I am not caught up in the Keydata mess) as it may ease my levies !! but that does not mean I would take an “I’m alright jack” stance !

    Harry has pointed out above that this is not the point, and it just highlights the “very” broad brush approach to regulation and FSCS claims we have to endure ! and malpractice of the FSA and FSCS !

    The good constantly (through no real fault of their own) get swept up with (IMHO) the bad minority

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