Keydata founder Stewart Ford has accused the FSA of causing £30m of losses for investors in the failed firm’s SLS Capital funds, in claims the regulator has denied.
Ford says the FSA and Keydata administrator PricewaterhouseCoopers blocked an attempt by him to rebuild the SLS portfolio of life settlement policies which would have seen investors’ initial capital and income payments preserved.
Around 410 Keydata investors were invested by the group in bonds managed by Luxembourg-based SLS, but the their £103m of investments were misappropriated in a fraud.
The Financial Services Compensation Scheme has since paid out to cover most investors’ capital losses although only up to a cap of £48,000 per investor. In addition the investors lost out on income payments of 7.5 per cent per annum that were promised when they invested. The FSCS compensation also resulted in a levy on the IFA industry.
Now Ford has said the client losses add up to £30m and were unnecessary as he had proposed to finance the rescue of the bonds through the transfer of a life settlement portfolio from his family trust Billericay.
He says: “To this day, the FSA and PwC have not offered any explanation as to why they rejected the SLS Capital rescue proposal. However, their reasons are clear enough to me – it simply did not fit their respective agendas.”
Ford says his bailout plan involved the selling of policies by his £10.9m family portfolio to cover income payments and also purchase other distressed life settlement portfolios that he expected to deliver sufficient growth to return the investors’ capital.
The statement comes after Ford’s attempts to assist in the rescue of another group of Keydata investors – whose portfolios of life settlements held by Lifemark hang in the balance – was last week blocked by Lifemark’s provisional administrators KPMG.
An FSA statement says: “On the basis of the information Ford provided to the FSA at the time about his proposals to rescue SLS, we were unable to conclude that it was in the best interests of investors. Ford is under investigation by the FSA and our concern about him is a relevant factor we have to consider in the context of any proposal he puts to us. nThe protection of consumers is at the forefront of our minds when considering any proposals. Keydata was placed into administration last June by the High Court. At no point did the management of Keydata oppose this application.”