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Lawyer calls for investigation into FSA’s role in Keydata

A lawyer representing Keydata advisers has called for an independent inquiry of the FSA’s handling of the collapse of Keydata, as he reveals a body of evidence on what the regulator knew about the firm and when.

The lawyer, who wishes to remain anonymous, says information gathered through Freedom of Information requests shows the regulator had been investigating Keydata and its products for three years before its collapse in June 2009 yet failed to alert the market to potential problems.

It shows an FSA risk assessment committee judged traded life settlement funds to be high risk in April 2008. However, it concluded no regulatory action was necessary because uptake of the products was low.

The information also shows that by December 2007, the FSA had carried out extensive supervision work with Keydata including site visits.

The regulator also discussed taking action against the firm, including ordering it to carry out a skilled persons review and suspend business activity, at a meeting in December 2007.

But the lawyer says that in the FCA’s FAQs on Keydata on its website, it implies that it only reviewed the distribution of the products, and not the products themselves.

In 2007 the FSA visited 11 advice firms to review the marketing and distribution of Keydata bonds. The review found widespread failing relating to the sale of the bonds.

The lawyer says: “All this cries out for an effective and independent investigation to throw light on the FCA’s behaviour and to address victims and advisers’ distress and anger at the facts that have now emerged.”

He also claims the regulator has hampered his enquiries by giving incomplete and late responses to FoI requests.

He plans to make key documents from the requests public on a website for Keydata investors.

In January, the Information Commissioner’s Office ruled the FCA breached the Freedom of Information Act by failing to respond to a FoI request related to its investigation into Keydata.

A spokesman for the FCA says: “Since 2009, we have placed increased focus higher in the chain (i.e. at the design phase of products) and on identifying these problems before consumer detriment occurs.

“This new regulatory focus has led to greater involvement by the FCA in particular products where detriment is foreseeable. In such cases we are now more willing to make public statements warning the market of our concerns, rather than relying on firms to make the right decisions on their own.”


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There are 14 comments at the moment, we would love to hear your opinion too.

  1. If the lawyer concerned wishes to remain anonymous, his views and the currency of this article are valueless.

  2. Irrespective of the whys and were-fore’s of who this lawyer is’ the fact of the matter remains that the info was requested by FOI and it seems pretty damning.

    More evidence of watching the country lanes while the motorways are having multiple pile ups ?

  3. The FSA and now the FCA have bullied firms into paying these fines, when no clients have complained and the FSA were at fault, just wrong!

  4. The fact that the lawyer wishes to remain anonymous is completely irrelevant and it is nonesense to suggest otherwise. His anonymity has absolutely no bearing on the facts. As for the currency of the article, thousands of ordinary people have lost their savings due to the inaction and unprofessional actions of the regulator. Nothing of substance has changed since Keydata to reign in their behaviour and with the liberalisation of pensions, savers will be even more exposed than ever before.

    Having made several requests under the FoI Act myself, the FCA are just as happy to dodge the questions, delay and prevaricate as their predecessors, the FSA.

    There is an epetitions on the governement website calling for reform

  5. Neil Shillito 14th May 2014 at 3:12 pm

    Pete. I’m not in any way suggesting the facts are incorrect or that people have suffered as a result of fraud and incompetence. I am however stating an irrefutable fact. No identity: no comment.

  6. Philip Castle 14th May 2014 at 4:58 pm

    So one department of the then FSA had concerns, whilst a senior member of another departments reports were STILL being issued painting Keydata’s Life Settlement Plans in a glowing light.

    And yet despite telling me and I quote “I do feel very upset that my report has influenced advisers and investors with such terrible results………….So, in answer to your very just questions, I was taken in by Keydata and the ease with which this happened made me feel that I couldn’t do this sort of work in future.” Debbie Harrison remains on the FCAs FS Consumer Panel …..

    I am sorry Debbie, for me, your position on the panel is increasingly untenable.

    Debbie Harrison is a Senior Visiting Fellow at the Pensions Institute, Cass Business School, where she is a researcher and the co-author of four landmark pensions reports. Elsewhere she has published a wide range of UK and global retail and institutional finance books and research reports and has been a contributor to the Financial Times on pensions, investment, alternatives and expatriate issues for 20 years. In addition Debbie is a consultant to major financial institutions and also runs financial training courses for institutions and government departments, including the Department for Work and Pensions, HM Revenue & Customs, and the Office for National Statistics. She is a trustee of the Financial Inclusion Centre, a financial research charity, and she is an adviser to the DWP on pension reform.

    Keydata commissioned Debbie to write this product review. The firm provided technical assistance but she retained editorial control throughout.

  7. Neil, a person’s wish to conceal their identity does not mean they have no identity. There are many occassions when people wish to remain anonymous; whistle blowers for example. There is no reason why a person should suffer loss simply because they tell the truth and it may be that this lawyer would suffer if he or she disclosed their identity. Perhaps their boss wouldn’t approve, perhaps their clients, there’s no point in speculating about another person’s circumstances but if they have information that should be in the public domain, I for one am grateful to whoever it is and I support their call for am independent inquiry.

  8. Neil Shillito 15th May 2014 at 9:05 am

    Hello Pete. I understand and agree with what you’re saying. The point I’m trying to make is that when you’re up against a powerful, unelected and unaccountable body like the Regulator you can jump up and down and shout as much as you like, but such accusations and assertions (true though they might be) will carry zero weight if made anonymously.

  9. Philip Castle 15th May 2014 at 9:33 am

    I agree with Pete. I post the vast majority (I post a lot 🙂 ) under my own name, but one or two things do go under a pseudo-name.
    It is only the use of pseudo-name. to make offensive comments or to attack individuals personally have an issue with.
    It is had enough getting ANY facts out of the FCA even with FOI requests so any info which is released anon, but is factually correct is appreciated.

  10. Martin Bryant 15th May 2014 at 9:51 am

    All of the FOIA information released by the FSA has now been posted on the keydata victims website.

  11. My thoughts.......... 19th May 2014 at 1:56 pm

    Has there ever been an organisation that so blatantly breaches its own rules and principles??

    No liability

    No accountability

    No senior management leadership or responsibility for anything……..ever

    Failure to cooperate

    Failure to operate in an open and forthright manner

    Failure to protect consumers

    Something has a very bad smell at the FSA/FCA !!!

  12. Much as many would wish it otherwise (including me!0 I’m afraid Neil Shillito is perfectly correct. This person could actually be a dustman for all we know. The points he makes are ones which many of us have suspected and deduced, but that counts for nothing unless he has the evidence in hard copy and at least provides ‘chapter and verse’ irrefutable back ups to his statements. Until that happens it is about as effective as my own rantings.

  13. I am not averse to eating my own words. II have been chewing assiduously after learning from an unimpeachable source that:

    a) This is definitely a competent barrister
    b) There are compelling reasons why at this stage he is seeking anonymity and I have an idea that the Editor has the information and in this circumstance is quite rightly protecting his sources.

    As I said before none of these revelations come as much of a surprise for those of us unfortunate enough to have become embroiled in this farce. I have a sneaking suspicion that our present regulator has a tailor made get out – ‘It wasn’t us Guv – it was them others’. I wonder where that sort of defence will get them?

  14. Interesting reply today from the Treasury Committee Chairman, Andrew Tyrie, to allegations of wrongdoing at the FCA…

    “The Treasury Committee is not currently inquiring into the FCA.”

    Ah shucks, the only time they are interested in wrongdoing is when they are actually conducting an inquiry. So that would be never unless you’re a big insurance company!

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