The Investment Management Association is calling on the FSA to launch an inquiry into advisers who recommended Keydata and Lifemark products.
IMA director of wholesale Guy Sears says because the Financial Services Compensation Scheme has paid compensation directly to investors, some firms that missold Keydata products may have avoided their liability.
In January, the FSCS announced a £326m interim levy, mainly to cover the £247m cost of compensation for Keydata investors. Fund firms paid £233m while advisers paid £93m.
Sears says: “There should be a proper inquiry into what advice distributors gave to establish exactly where the problems arose and where the blame lies. What I find strange in the case of Keydata is that clients have been paid by the FSCS but complaints have not necessarily been raised with the initial adviser.”
AWD Chase de Vere, a Keydata distributor, has upheld at least eight complaints over the way it sold Keydata products.
A spokesman says: “There are lots of questions that are still unanswered about Keydata, including the distribution and regulation of the products and what happened behind the scenes. We need an all-encompassing inquiry covering all these aspects rather than looking at distribution in isolation.”
Philip J Milton & Company managing director Philip Milton says: “I do not believe the average IFA should be lambasted for selling Keydata products. We need to understand what went wrong and the regulator’s role but I would question whether an inquiry is necessary.”
The FSA has written to an undisclosed number of Keydata distributors as part of a wider investigation into how the products were sold.
A judicial review brought by Keydata founder Stewart Ford into the way the FSA investigated the firm will be heard at the High Court in London on July 21.