It is now investigating Lifemark alongside its investigations into SLS Capital, the other special purpose investment vehicle used by Keydata.
Around 23,000 Keydata clients invested £349m in Lifemark and the SFO investigation is an ominous move, although perhaps inevitable.
Lifemark is already in administration, with all income payments to Keydata investors frozen. The FSA has raised concerns of a liquidity gap involving Lifemark assets and we are unsure about what proportion of these assets are recoverable.
These are worrying times for Lifemark investors. Many have invested their life savings into the relevant Keydata plans. The Lifemark assets dwarf the £103m of misappropriated SLS assets which IFAs are currently paying the price for through the grossly unfair FSCS interim levy.
If a large amount of the Lifemark assets are lost, it is likely that the FSCS will come after advisers again unless the much needed FSCS reform is pushed through after the general election.
The SFO has also announced that a “sizeable” proportion of the £103m SLS assets have been traced.
As this issue develops, the FSCS must fight hard to ensure it receives a decent proportion of these assets which can then be rebated to the intermediaries currently paying for related claims.
The FSCS has a duty to try to regain these assets on behalf of the industry. In the past, it has taken action against firms it believes are responsible for claims it has paid out, for instance, precipice bond providers, and retrieving any SLS assets should be no different.
Elsewhere, Money Marketing welcomes the formation of the Keydata investor action group set up by Anthony Lahert, who says the group will not be pursuing advisers and has the support of many IFAs trying to help clients get their money back.
Alongside the disgraceful way that the FSCS has handled responsibility for the Keydata costs, it must be rem-embered that investors need a decent amount of their money back if we are to retain any kind of consumer confidence in the industry.
Fundamental reform of the FSCS, plus potential claims against those responsible for the Keydata debacle, including perhaps the FSA, may be the only way of ensuring that advisers and investors have any confidence in our compensation system.