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NDFA: Advisers do not expect repeat of Keydata debacle

Advisers have reassured investors that the expected administration of NDFA is unlikely to lead to a repeat of the Keydata debacle.
Money Marketing revealed last night that NDFA is likely to go into administration this week.

The FSA is expected to conclude that NDFA is potentially liable for losses on its Lehman-backed structured products. The firm has around £30m of investors money in Lehman-backed plans.

AWD Chase de Vere senior manager Jason Walker says he expects the anticipated administration process to be a lot smoother following confirmation from third party administrator OPAL that it will continue to administer existing plans on behalf of NDFA.

He says: “With Keydata having happened and still ongoing we need to make it clear to clients that this is going to be a different scenario and should be a lot smoother. The news that OPAL are going to administer the plans is good news for them so it’s a different situation, there’s not any fraudulent activity within this.”

“From our point of view it is a case of making sure that any clients in NDFA plans that are due to mature this month or next month, that they do mature and that OPAL can administer those fairly quickly.”

Walker says the firm is keeping its attention on other structured product providers who had exposure to Lehman Brothers and expects news to be more forthcoming from the FSA because of public concern.

A spokesman for structured product provider Meteor who was also exposed to Lehman Brothers says: “Clearly we are unable to comment on the situation regarding any other firm but would confirm that we assisted the FSA earlier in the year in their review of Lehman backed products but have had no further contact with them regards this matter since this time.”

A spokesman for Arc Capital & Income says: “We have seen the article in Money Marketing on October 13 concerning NDFA and Lehmans backed products which notes that Arc also issued Lehmans backed products. We have held discussions with the FSA and are continuing to offer new products whilst dealing with the issues that they raised.”

Chelsea Financial Services head of investments Matthew Woodbridge says: “This is obviously not good for structured products on the back of Keydata or for financial services in general. The one crumb of comfort is that OPAL will continue to administer the existing products.”

Lowes Financial Management managing director Ian Lowes emphasises the firm has no exposure to NDF Lehman plans but says: “Hopefully there should be no implications here. OPAL have been paid to administer these plans until maturity so they are just being asked by the administrator to fulfill the contract. They have a job to do and an obligation.”

However, he warned investors who hold Lehman-backed plans via NDFA or through another provider not to assume that any compensation claim submitted would necessarily be paid out.

He says: “Don’t assume for a minute that you have got a claim now or your claim will be paid. The client might be able to try and put a claim in against NDFA but I don’t think that it will be right or correct to assume that if you’ve got a Lehman’s NDFA plan therefore you’ll definitely get compensation.”

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