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FSCS urged to preserve Lifemark value to reimburse IFA levies

Keydata founder Stewart Ford has urged the Financial Services Compensation Scheme to preserve the value of Lifemark’s portfolio so any compensation levies that fall on IFAs can be reimbursed.

Ford says Lifemark, the Luxemburg-based life settlement bond provider that £349m of UK investors’ savings were placed in via Keydata, contains value that could offset future levies.

Ford says: “The suggestion that the Lifemark portfolio has no value is clearly nonsense. This claim is a political move by the FSCS designed to back up the action the FSA took to shut down Lifemark part way through its business cycle, which has caused unnecessary financial hardship for so many elderly investors.

“My fear now is that, as the FSCS pays compensation and so steps into the shoes of the bondholders, it will not take advantage of the opportunity to use future returns from the Lifemark portfolio to reimburse the UK’s retail financial services firms for the increased FSCS levy they must bear as a result of this compensation.”

The FSCS announced on November 30 that it is considering Lifemark to have zero value, for the purposes of providing full compensation to Lifemark investors, up to its £48,000 limit per person.

FSCS claims in a single financial year, April to March, are likely to be paid for by a levy on the investment intermediary sub-class up to a limit of £100m, with further claims being paid by investment providers up to a total for the class of £370m.

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. Ah, yes IFA levies.

    Dear Mr Ford, the FSA said this last week:

    “A firm which had been given permission by the FSA to advise on, act as agent for, arrange deals in and manage investments would be allocated to the ‘Class D Investment’ fee block which contains both fund management (sub-class D1) and investment intermediation (sub-class D2). Such a firm’s FSCS levy would be based on the amount of tariff data they reported for each relevant sub-class and not a proportional split between these sub-classes.

    You should be aware that specific information the FSA receives from, or about, regulated firms or individuals, where this is not in the public domain, is likely to be prohibited from disclosure under section 348 of the Financial Services and Markets Act 2000. This is because it would be confidential information received for the purposes of carrying out our regulatory functions and supervision of those firms and individuals. Such information is therefore likely to be exempt by virtue of section 44 (Prohibitions on disclosure) of the Freedom of Information Act 2000.”
    ************************

    Can you tell us Mr Ford? Or can you give the FSA permission to disclose?

  2. “The suggestion that the Lifemark portfolio has no value is clearly nonsense. This claim is a political move by the FSCS designed to back up the action the FSA took to shut down Lifemark part way through its business cycle, which has caused unnecessary financial hardship for so many elderly investors.

    It appears that the FSA has become accident prone with its manouverings. I am so sorry for IFAs having to pick up the tab.

  3. Being an IFA could end up being like a “Lloyds Name” with an unlimited liability from the FSCS should a number Key Data type events happen, resulting in the quality IFA’s paying the price for getting things right!

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