Norwich & Peterborough Building Society reassured a concerned Keydata client that his investment would perform strongly just months before the firm’s collapse.
In a letter sent in October 2008, seen by Money Marketing, an N&P financial planner told a worried investor in Keydata bonds: “Rest assured this investment is one of the few that will do what the original brochure explained.”
Keydata’s brochure said its defined income plan bonds would deliver “attractive levels of income or growth”. They claimed that investors could invest via an Isa “completely tax-free”.
But Keydata collapsed in June 2009 after HM Revenue & Customs found that its life settlement bonds were not eligible for Isa status and it issued a tax bill.
Investors later stopped receiving income from the bonds when it emerged that £103m of Keydata assets had been misappropriated by a Luxemburg company called SLS while another company, Lifemark, remains on the brink of collapse.
N&P is fighting compensation claims from clients who the society advised to invest in Keydata, including 250 investors being represented by law firm Regulatory Legal.
N&P chief executive Matthew Bullock has admitted the firm’s total possible Keydata liabilities are £50m, although he insists that the advice was not at fault.
N&P said it would not comment on individual complaints but insists this was not a standard letter it issued to clients.