View more on these topics

Regulator had fears over risk posed by Keydata phone sales

The FSA had concerns that Keydata’s sales contact with IFAs was “at arm’s length” on complex products prior to its insolvency, Money Marketing understands.

The revelation follows news from administrator PricewaterhouseCoopers on Tuesday that it has shortlisted “a handful” of bidders for the Keydata business, with a decision likely this week.

The FSA is understood to have been worried about the firm’s outward-bound telephone approach to distribution used by sales staff on more complex products such as those linked to tra- ded life policies.

A source close to the firm says: “The FSA was concerned that the sales relationship between the IFA and Keydata was at arm’s length and not close enough.

“The concerns would be, do customers know exactly what they are getting? Do you need to sit in front of somebody and have that conversation and articulate exactly what the risks are?”

Keydata is understood to have deployed regional sales staff last year to deal with more complex business with IFAs as a way of addressing this issue.

Technology and Technical director Kim North says: “The FSA has always been apprehensive about structured products. The FSA is worried when the sales function is simply outward-bound telephone calls and that is what the majority of Keydata’s sales process was. The responsibility lies with the IFAs to make sure they understand the product.”

The FSA confirmed that Keydata’s tax problem came to light while it was already investigating the firm but refused to comment on the reasons behind the probe or when it began. It would not comment on Key-data’s sales processes.

Recommended

Mortgage brokers to train as IFAs

Jonathan Cornell, newly appointed head of communications for First Action Finance, is looking to train mortgage brokers as IFAs as part of the firm’s plans to buy IFA client banks.

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment