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MM leader: We need Keydata review to get the whole story

Last week, the Serious Fraud Office announced it had found insufficient evidence to secure a prosecution in relation to Keydata.

However, debate over who is to blame for the debacle is likely to intensify in the coming months.

A recent Frequently Asked Questions briefing from the FSA acted as a staunch defence of the regulator’s actions in applying to put Keydata into administration in June 2009.

Following the administration, administrators PricewaterhouseCoopers discovered that £103m may have been misappropriated from Keydata investment vehicle SLS Capital, with the trail leading to deceased businessman David Elias. The SFO was unable to shine any further light on the matter.

The FSA’s investigation into Keydata and its founder Stewart Ford is at an advanced stage. Ford says the decision to put Keydata into administration caused the liquidity problems at Lifemark. The FSA insists the investment vehicle had liquidity problems before it took any action against the firm.

Question marks have also been raised about whether the FSA should have acted sooner. KPMG warned the regulator in 2005 about the misuse of its name in marketing literature while the FSA itself raised concerns about the suitability of advice around certain Keydata products in 2007.

We await with interest the FSA’s upcoming report into the Keydata saga. However, particularly given the accusations of regulatory failure associated with the Keydata debacle, an independent review into the matter should also be conducted to ensure we truly get to the bottom of what went on and who is to blame.

Fresh approach

Lloyds Banking Group’s new chief executive António Horta-Osório set a fine example in withdrawing from the judicial review brought by the British Bankers’ Association against the FSA and Financial Ombudsman Service and making provision for £3.2bn compen-sation to be paid to customers.

Barclays followed suit and the BBA subsequently announced it would not be appealing the decision to reject its judicial review. As the biggest PPI offender, Lloyds was a lead player in pushing for the judicial review under previous senior management. Let us hope this fresh thinking continues into other areas of the group’s business.



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There are 7 comments at the moment, we would love to hear your opinion too.

  1. In my opinion there must be an independant review of the whole Keydata and Lifemark situation. The public deserve to find out exactly what went on and who caused this mess. The recent admissions from the Serious Fraud Office that no fraud occurred by Keydata or Mr Ford adds to this. Directors at Keydata have been calling for an independant investigation for a long time now, hardly the actions of people with something to hide. Lets see if the FSA are as honest and allow an independant commitee to get to the bottom of this complete mess.

  2. Does anyone remember receiving this back in 2007 before everything blew up?
    “Product review by Debbie Harrison, SeniorVisiting Fellow of the Pensions Institute at Cass Business School and contributor to the FinancialTimes
    The Secure Income Plan offers private investors attractive income and growth prospects via a
    relatively new asset class – the secondary market in US life assurance products – hitherto only
    available to institutional investors.”

    About the author
    Debbie Harrison is a SeniorVisiting 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 FinancialTimes 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 forWork 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. She is happy to discuss any issues arising from this research and can be contacted at xxx

    It was a 5 page summary of the “product” (which was not a product) and the credentials of the writer probably influenced at least one or two IFAs.

    I don’t think she is at fault, but it would appear to me to make sense to ask her for her reserach notes and thoughts on the matter as she probably digged as deep if not deeper than the FSA did itself.

    If the FSA did not understand Life Settlements at the time, it would have made sense for them to speak to her BEFORE PWC were appointed and perhaps engage her services. From teh day PWC were appointed the Lifemark Life Settlement Portfolio has not been administered properly in my view…

  3. From what I hear, the SFO dropped their investigations 8 months ago but failed to either make that public or inform S.F.’s legal team. That means that for over eight months a gag has been in place stopping the other side of the story from being placed in the public domain. That cannot be right. Over that period the FSA and PwC have refused to answer any questions regarding this affair, using the excuse that they could not do so while the FSO’s investigations were happening. That cannot be right either.
    The involvement of PwC in this case is crucial and should be examined in depth by higher authority. The open letter to them from S.F. has never been acknowledged nor answered. If you read it you will now find, thanks to the latest development, that there are many elements of truth in the document and they must be addressed.
    If the financial industry in this country is to regain its stature in the world it must be seen to be honest and true, at the moment it is a laughing stock. Independent Financial Advisors? For independent read dependant! Dependants of a failed controlling authority that can do what it wants without question, slap levys on their unquestioning and subserviant victims and associate with high flying, money making companies such as PwC to the detriment of the investors and the public.
    It is not only Keydata that has borne the brunt of the PwC attack, read about Premier Motor Auctions, they were caught in the same web by a similar debateable practice, allowing PwC to glean over £2m for their part in the debacle. Frankly, the system stinks and should be totally re-constituted. My advice to IFA’s is to seek a regulator in another Euro country and put your faith in them – they have to be better than the bunch we are stuck with.

  4. Whether Stewart Ford and his fellow directors or Kedyata were at fault or not and whether the post above is from a Keydata insider or not. Whether readers think so or not is immaterial without proof. What I would challenge anyone to disagree with is the first two paragraphs of “CHAY’s” post. A gag kept in place when it may have been known it should have been removed is potential malfeasnce in public office.
    Who investigates that? Notice I say potential as I am not accusing anyone of anything, whether it be Mr Ford, Keydata, FSA officials or anyone else. What I am saying as just as our Client Agreements requires WE identify conflicts of interest, surely there are some massive ones at the FSA & PWC when many of us have our concerns about the FSAs handling of the whole Keydata debacle.
    I wasn’t going to post anon, but had second thoughts, sorry.
    Lets have an Independant Investigation please. Any suggestions as to who should be involved?
    What about someone like Gary Heath or Evan Owen with someone with a legal background involved too an get Dr Harrison’s input as well. Evan’s been quite critical of Life Settlement plans… as well as of the FSA so he couldn’t be accussed of favouring one over the other.

  5. Anonymous | 12 May 2011 1:36 pm

    Yes I would love to take a look under the bonnet.

    However, this is one of many, many failures the regulators have allowed to happen (or even caused).

    The whole concept of regulation by civil servants is now discredited, they may be able to follow the party line slavishly but when Clive Briault described the banking crisis as a “collective intellectual failure” it struck a chord with many observers yet the likes of Mark Hoban appear to have missed the point and gathered all the architects of previous failed regulators to see if they can do a better job this time. Well all the evidence suggests that this is a bridge too far.

    We need an overhaul of regulation from the ground up, this ‘top down’ approach by people who can’t see the wood for the trees will not work.

    We also need an independent body to scrutinise every aspect of the regulators and make them fully accountable to Parliament.

  6. Roddi Vaughan-Thomas 13th May 2011 at 3:05 pm

    I have every reason to believe that Chay is one of Stewart Ford’s lawyers. I presume the other side of the story Chay refers to is the £38 million of undisclosed upfront (10%!) fees taken by Stewart Ford’s British Virgin Island family trust that directly caused the liquidity problems that Lifemark faced.

    The incompetence of the FSA in this case beggars belief and is the reason why Stewart Ford is going to keep the money that the rest of the industry has had to pay back to Keydata investors. This is the same amount of money as Robert Maxwell and Barlow Clowes. Stewart just has better lawyers.

  7. Julian Stevens 14th May 2011 at 7:47 pm

    The FSA claims on its websire to be “an open and transparent regulator”. File under L.

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