The High Court has rejected an application by three financial advice firms for the Financial Ombudsman Service to halt decisions on Keydata advice worth hundreds of thousands of pounds.
The court rejected the advisers’ argument that the complaints should be stayed until the outcome of the Financial Services Compensation Scheme’s legal battle with advisers over Keydata is known.
Westscott Financial Services, CBHC and DTE Risk & Financial Management applied for a judicial review of the FOS’s refusal to stay complaints brought against them by five former clients relating to advice to invest in Keydata.
The claims are thought to be worth several hundred thousands of pounds.
The advisers argued the FOS had failed to appreciate that the FSCS litigation was directly relevant to the complaints.
But the court ruled the FOS is designed to resolve disputes quickly, and had it stayed the complaints, the investors would have been tied to the uncertain timetable of the FSCS litigation.
The FSCS litigation is expected to go to trial late next year following the selection of new lead defendants in October.
National law firm DWF partner Harriet Quiney says: “The outcome of the FSCS case will be useful information for the FOS, but it will not determine whether the advice was suitable in each case as that will depend on the specific facts of the case.
“There is a need to balance the FOS having the best information available, and the time it would take to reach a decision. There is still a chance the remaining defendants in the FSCS litigation could settle, and why should the FOS complainants have to wait another year or more to get a decision?”