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Non-Isa clients win cash claim

Some clients with non-Isa investments in certain Keydata plans who said they relied on misleading marketing literature have been successful in their claim for compensation.

An AWD Chase de Vere secure income bond 2 client and another direct Keydata SIB 3 investor on the Keydata Victims website have been awarded compensation by the Financial Services Compensation Scheme after stating they relied on the brochure’s representation about KPMG in their investment decision.

Deloitte has been quizzing non-Isa SIBs 1-3 investors claiming compensation on behalf of FSCS, asking them to clarify how influential the KPMG representations were.

The FSCS has insisted it is dealing with claims on a case-by-case basis but advisers previously questioned its approach, saying only claims for both an Isa and direct investment or standalone Isas appeared to be successful.

In a 2005 SIB 1 brochure, Keydata stated KPMG constructed the financial models used to structure the bond, checked the credit ratings of the insurance companies issuing the contracts and monitored the credit rating of the portfolio of investments.

But in a letter to the Keydata action group KPMG chairman John Griffith-Jones claimed the description was “inaccurate and misleading” and said the matter had been flagged to the FSA.

AWD Chase de Vere senior manager Jason Walker says the fact that some of these non-Isa claims are being paid is good news but warns that other investors should not assume their own claims will necessarily be successful.

He says: “This is a positive development but it appears they are still reviewing these on a case-by-case basis and so, at this stage, not all clients can expect to receive the compensation.”

AWD Chase de Vere is one of eight IFA firms backing a new action group which has formed a fighting fund for possible legal action against third parties to recover millions lost through SLS Capital and Life Settlements Capital.

The Keydata SLS LSC Investors’ Trust Action Group was recently founded by investor Anthony Lahert and is backed by law firm Addleshaw Goddard.

AWD says its exposure to SLS/LSC bonds represents less than 1 per cent of the total SLS/LSC funds involved.

AWD Chase de Vere head of communications and action group spokesman Patrick Connolly is urging other IFAs and clients to register with the group. He says legal action is likely to cost at least £1m and says the group is looking to work with the FSA and FSCS rather than against them.

He says: “We want and need IFAs to be involved. Our focus is not on pinning the blame but about the best way to get money back for investors.”

IFAs or clients wanting to register should visit: www. ksl-it.com

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Reaction to an article on Money Marketing’s website over the Unite union slamming Aviva for “stabbing employees in the back” with its move to ditch its final-salary staff pension schemes. This would mean no further new entrants or new contributions as the final-salary scheme members would be transferred to the money-purchase scheme, which has 14,000 staff members. Aviva defended the move, arguing that the system is “inequitable and unsustainable” as two-thirds of the pension contributions now go to fund just one-third of members. What did Money Marketing readers think?

Instead of blaming Aviva, Unite should be directing their ire at one Gordy Broon who since 1997 has single-handedly destroyed the retirement aspirations of hundreds and thousands of private sector workers with his tax raid on pension schemes. The total tax take so far, I understand, just about equates to the actuarial losses of all final-salary schemes.
John D

First, do stop whingeing about Mr Brown. If my memory serves me correctly it was Nigel Lawson of the Conservatives who started ripping the financial heart out of pensions. Do Aviva not want to rip out more money from their with-profits fund to make up for any shortfall in the final salary scheme as was done in 2008? Norwich Union said that its use of the with-profits fund to pay for business expenses was within the rules and here was I thinking the with-profits fund belonged to the policyholder.
Graham Smith

As an employee of over 10 years standing, I was prevented from joining the final-salary scheme as it had already closed. Since then, the company has been subsidising the scheme for the shrinking minority. Instead of attacking Aviva, I would suggest Unite, of which I am a member, would have been better employed lobbying the Labour Government to bring about long overdue pension reform.
Anonymous

I can’t believe some of the comments here. Whatever the affordability, to Aviva, they made a promise to these people. Am I to assume, then, that if all of you that think it is OK for Aviva to break their promises, then you would also do the same to anyone you know? Is that the sort of society we want to live in? The excuse that Aviva can’t afford it (because they have made mistakes in their judgement and, yes, I appreciate due to some outside circumstances as well) is not good enough. By all means, do not allow new members into these schemes because they know what they will be getting when they go in but don’t say it’s OK for the wealthy to stick it to those they have promised they would look after. That is just immoral.
Anonymous

If Aviva want to be equitable with their pension expenditure per member, DC and DB, then surely they should be increasing the employer contribution to the DC scheme by a third now they are switching everyone into it?
Manchester Cynic

Let me get this right, you lost £2bn in four years from the pension pot you have been managing for your own staff. What hope is there or your customers if you can’t even get that right? Spectacular advert for the quality of Britain’s biggest insurer.
G Scott

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