A professional indemnity insurer with Keydata exposure has secured a 60 per cent early settlement discount with the Financial Services Compensation Scheme, Money Marketing understands.
Law firm Herbert Smith has been writing to Keydata distributors since October on behalf of the FSCS to recoup some of the compensation paid to Keydata investors.
In February, the FSCS offered Keydata advisers a 50 per cent early settlement discount on claims of less than £50,000.
Money Marketing understands since then a number of firms have made counter offers of up to 80 per cent discounts, which have been rejected by the FSCS. Some firms are refusing to acknowledge Herbert Smith’s letters and are rejecting early settlement discounts.
It is understood that one PI insurer has now agreed to a 60 per cent early settlement discount.
Law firm Beale and Company is acting on claims worth a total of £18m. Partner Damian McPhun says: “There is an ever-hardening core of advisers who do not believe the FSCS will be able to discharge its burden of proof to show individual firms were at fault. A significant proportion are prepared to go down to the wire on this.”
The FSCS says it is confident it will be successful if cases proceed to trial.
Informed Choice managing director Martin Bamford says: “Proceeding to trial puts all advisers in an even worse position as we may have to pay court costs on top of compensation costs.”