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IFA firm to enter administration following £6m Keydata claims

IFA firm Target Financial Management is to enter administration following £6m of claims relating to Keydata.

Bath-based TFM, which has 28 employees, is part of the group Target Chartered Accountants, which has around 197 employees. Subsidiaries Target Consulting Group and Target Consulting entered administration on Friday and TFM is expected to enter administration imminently. Administrators have not yet been appointed to Target Chartered Accountants, which is based in London.

Target Financial Management was among the firms being pursued by the Financial Services Compensation Scheme to recoup compensation paid to Keydata claimants.

Law firm Herbert Smith has written to Keydata distributors on behalf of the FSCS to kick-start the legal process of pursuing recoveries.

In January, the FSCS imposed a £326m interim levy on the industry, mainly to cover the costs after Keydata collapsed. Advisers paid £93m while fund firms paid £233m.

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Comments

There are 21 comments at the moment, we would love to hear your opinion too.

  1. Wow – 28 employees somehow generated £6 million of claims?

    There were busy selling Keydata!

    One can only hope the senior management of TFM don’t get away with dumping their laibilites and then forming a new firm with the assets (i.e. clients) of TFM.

  2. How about if the “advisers” who sold the Keydata have since moved on and the 28 employees who are now on the dole had nothing to do with it?

  3. OK. If the FSCS has already paid out then the bill for this collapse and further Keydata claims will not fall on the rest of the ‘members’? But everything else these people sold will? Sorry if that sounds confused.

    Is there any PI insurance?

    What a shambles.

    Who else is sick and tired of regulation as we know it?

  4. But I thought that all clients could rely on a firm with Chartered in their title? Wasn’t that what RDR was all about?
    Oh yes, they can rely on it as the F-pack will force through redress whether the advice was flawed or not.

  5. I suspect that the catalyst for the demise of TFM was not Key Data, but the highly geared growth of TCA.

    It is unfortunate that the latest blog on their website is entitled, “selling out”.

  6. Chris F

    Yes – I do feel sorry for the Admin Team and Advisers who didn’t recommend Keydata – all they will have got out of this will be redundancy.

    ….andf a quick look at the FSA register* shows only 2 advisers have been there over 2 years – the most of the CF’s having joing in the last 18 months.

    So yep – looks like the people who might have done the selling are long gone.

    * – And a little worryingly – still show as Authorised as a firm!

  7. What was their ‘compliance’ officer doing?

  8. It has just been announced that the Farepak windup fees have exceeded the compensation.
    Watch this space.

  9. On the question of PII, maybe it was the excess per claim that sunk the ship. 150 claims with a £10K excess on each and you’re looking at £1.5m which is well enough to break most businesses.

    That aside, it can’t be much longer before PI insurers refuse to provide cover in respect of FSA-orchestrated hindsight reviews to cover up its own regulatory failings. What will the FSA do then? Probably just plough ahead regardless and wipe a few hundred more IFA firms off the map, all in keeping with the Grand Extermination Plan. And yet, incredibly, these people actually believe they’re doing a good job and making the world a better place.

  10. Any doubt I may have entertained as to the intention of the FSA and its legions to kill off all IFAs has now evaporated.

  11. I feel another one off levy will shortly be on its way to us!

  12. Is it me or wasn’t the issue with Keydata a misappropriation of assets. That feels like a failure of the regulator rather than bad advice? May need to wait for all the facts to emerge …

  13. Some months ago I made a FOA request to find out what due diligence the FSA had done on Keydata when it granted authorisation.

    I got three answers:

    1) It is commercially sensitive information – I fail to see what is commercially sensitive about a bankrupt business.

    2) It is not able to retrieve the information because it in different places – which translates as “we didn’t bother to keep adequate records”

    3) The PIA said it was okay – but if that is sufficient due diligence for the FSA why shouldn’t it be for an IFA?

  14. Stephen Carpenter 28th November 2011 at 5:31 pm

    The advisers responsible for this have all diasappeared to Epoch (with exception of one who is still there). BUT. The board that allowed them to do it remained. This is a case of when you let accountants run an IFA practice. Which they did poorly.

  15. I agree with Something smells- surely the failure here is of the investment company (Keydata) and the regulator, not that the advice was necessarily poor quality? That Target had £6m in the Plan(s) means nothing if that represented a small percentage of total client assets. The regulator was happy that the product was legitimate or it wouldn’t have granted it ISA status so there’s quite a lot that could be wide of the mark with what’s been said here already.

  16. Useless Regulator 28th November 2011 at 6:51 pm

    And all under the nose of the FSA. Were the FSA regulating this industry at the time or are they just their to close the stable door after the horse has bolted?

  17. previous employee 28th November 2011 at 7:19 pm

    Target was not a chartered financial advisory firm. charteres status was only in relation to the accountants.

  18. ‘This is a case of when you let accountants run an IFA practice’

    Quite. You lay down with dogs, you get up with fleas….

  19. There but for the grace of the Almighty Architect of the Universe go I and many others who will fall by the wayside in the year to come.

  20. I will simply repeat the below so that it is read again and some of the holier than though THINK about what this FSCS battle pursued by HS will mean. The ONLY people will win are the legal profession and regulators who wll be paid win or loose n both sides with ours and our clients money.

    Evan Owen | 28 Nov 2011 2:18 pm

    OK. If the FSCS has already paid out then the bill for this collapse and further Keydata claims will not fall on the rest of the ‘members’?
    BUT EVERYTHING ELSE WILL.
    Is there any PI insurance?

    What a shambles.

    Who else is sick and tired of regulation as we know it?

  21. Checking the FSA register, Million Plus FP was first authorised on 14th November 2011. It has no RIs yet but the contact details are for the ex-Director of Target Financial Management. Target goes into administration on or around 28th November and the Million Plus takes on the assets without the liabilities after a very short time. Sounds like something smells bad around here.

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