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Hargreaves blames FSA for failing to heed warnings on Lifemark products

Hargreaves Lansdown founder and executive director Peter Hargreaves believes the FSA is to blame for the latest huge Financial Services Compensation Scheme levy to pay for losses on Lifemark products.

He says: “Hargreaves Lansdown was violently against these products, we spoke out in the nationals and trade newspapers about them, to the FSA, we said they were all rubbish. So here we are screaming from the rooftops saying this is a crap product and we never recommended them to any of our clients and we have one of the biggest bills of all.

“The regulator must be responsible, a number of people complained about Keydata and nothing was done, they are allowed to trade and create more products and what happens, the FSA people get more bonuses.”

Chelsea Financial Services managing director Darius McDermott says: “We were always against products based on life settlements as we could not quantify the downside. Keydata aggressively tried to sell these products to us and were eventually asked to leave our building. We think the bill is completely unjust and unfair.”

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Comments

There are 7 comments at the moment, we would love to hear your opinion too.

  1. There must be some piece of Euro legislation that outlaws this. Something on human rights perhaps…

    Anyone know their law out there? If we don’t stand up we will all be out of business. These levy’s may well take some firms below their capital adequacy limits.

  2. They fill in their RMAR (now Gabirel) like the rest of us. All the information they needed is in their returns.

    If it was asked for in plain english, they might have seen it coming……….

  3. Although I agree with the points, I must take up the comment from Darius “we could not quantify the downside”
    Just for his future reference if a client invests £100 (without debt secured in the clients name) then you could quantify the downside as £100. Now that wasn’t that hard even for an execution-only broker like Chelsea!

  4. I had a conversation with my Wife last night about Lifemark and how we would have less money as we were having to bail out a company with which my business had nothing to do, whose business I strongly disagreed with and who were clearly not IFAs. I explained that The FSA had ignored warnings (or didnt act upon them). My Wife is a mild woman but I cannot write what her response was. She then said “Well, thats one mess we are paying to sort out! At least we wont have to bail out dodgy boiler room share scams.”

  5. Very reminiscent of Lloyd’s in the late 1980s rampant fraud by a few which resulted in massive payouts by the Names on top of the earlier levy to bail out the names in the Sasse syndicate.
    As this levy is based on the level of annual eligible income up to April 2010 it would be only correct and fair that all those employed by the FSA return their bonuses for that year and suffer the same percentage levy on their salaries. Then there is a chance that they might listen to the sensible voices in the Market in the future.

  6. Hargreave and Chelsea saying they screamed from the rooftops about Keydata ???
    Interesting, seeming as Giles Hargreave has run the Keydata VCT for x number of years , and Chelsea FS bought European Privatisations and VCTs from Keydata. If they had so many concerns about them , why were they in bed running and selling their products?

  7. Another perniciously engineered brickbat to the IFA sector on the part of the FSA, with the added bonus of a potentially large number of small firms being de-authorised as a result of being unable to maintain the required level of capital adequacy. Those who can see that fate in prospect may as well refuse to pay and just wind up their businesses with whatever there may be left to salvage from the wreckage. Another success for the FSA to chalk up as part of its Grand Plan of extermination. One wonders if the FSA intentionally ignored or failed to act on the information in its possession, in the knowledge that this would be the eventual outcome.

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