Keydata founder Stewart Ford is bringing a £371m legal claim for loss and damages against the FCA which alleges the regulator’s investigation into Keydata was an “abuse of power”.
In a letter before action sent to the FCA last week, seen by Money Marketing, Ford claims the wrongful actions of the FSA during its Keydata investigation caused “grievous and irreparable harm” to his reputation as well as direct financial loss resulting from the closure of Keydata.
The claim is against the investigation team at the time and the FCA, as Ford says the regulator is liable for the actions of its statutory predecessor.
He says the nature and basis of the claims also override the statutory immunity available to the regulator under the Financial Services and Markets Act.
Ford is pursuing a claim of ‘misfeasance in public office’, claiming the FSA had an ulterior motive for its investigations into Keydata and his conduct.
He says: “The purpose was to demonstrate the effectiveness of the FSA as a ‘robust’ regulator in the wake of the financial crisis of 2008 and thus restore public confidence in the FSA.
“The FSA’s actions, as carried out by the investigation team, were politically motivated and the outcome of the investigation was pre-determined. No consideration was given to the consequences of the decision to force the closure of Keydata or the intervention into Lifemark. This amounted to nothing less than an abuse of power.”
Keydata’s administration in June 2009 prompted a £326m Financial Services Compensation Scheme interim industry levy in 2011.
Ford claims Keydata was a successful and profitable company until it was “ambushed” by the regulator in 2009. He says Keydata was at the time in the final stages of agreeing a way forward with HMRC relating to protecting the Isa status of Keydata investors.
Ford says: “The FCA has acted illegally in its dealings with me and it is not above the law. The regulator has ruined my life and I fully intend to stand up to those responsible.”
Ford has calculated the £371m figure based on loss and damage relating to: the closure of Keydata, which he says was worth in excess of £100m in June 2009; the closure of Lifemark, of which he was a shareholder; the loss of future income streams in the form of distribution fees paid by Lifemark to entities owned by trusts set up by Ford for his family; the loss of future broker commissions earned by entities owned by the trusts in respect of the acquisition of life settlement policies for Lifemark; and reputational damage.
The FCA restarted its disciplinary proceedings against Ford in July 2013 after he lost his bid to have previous FSA investigators taken off the case.
Last week the FCA’s regulatory decisions committee heard oral evidence from Ford in the case.
An FCA spokesman says: “The FCA’s disciplinary proceedings against Mr Ford continue and under these circumstances it is inappropriate to comment.”