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Ringfence should protect assets

Advisers and product providers believe that Keydata being placed into administration should not create a repeat of the Lehman Brothers’ structured product debacle as assets are likely to be ringfenced.

Blue Sky Asset Management, whose plans are administered through KIS, says client assets are held through Keydata Product Nominees Limited, which cannot become insolvent as it has no liabilities, staff costs, cashflow or trading activity and is not dependent on the solvency of Keydata.

BSAM says the risk to capital for investors is not with KIS but from the solvency of the counterparties providing the assets – the major investment banks that provide the financial securities which deliver the features of any plan.

Blue Sky chief executive Chris Taylor says: “The bottom line is that, based on our working knowledge of the account management process involved in structured investments, we do not believe that clients’ investments are at risk in the current situation as it is the solvency of the counterparties that provide the assets that back structured investment plans that is the critical factor.”

Lowes Financial Management managing director Ian Lowes says: “This is no repeat of the repercussions of what happened with Lehman’s last year. It is not a loss-making situation as Keydata is the administrator.

“It has occurred at an inconvenient time but this could have happened to any administrator, it just so happened it was a structured product.”

AWD Chase de Vere senior manager Jason Walker says: “The assets of the investment plans should be ringfenced. My main concern is whether there are going to be any delays to income-based payments or maturity payments so we want to make sure the payments will be maintained.

“Any detriment to the client for Keydata going down would be covered by the Fin- ancial Services Compensa- tion Scheme.”


Longer delays for annuity transfers

Annuity transfers took an average eight days longer in 2008 compared with 2007 despite the ABI initiative to speed them up, according to a new survey.

Governance still problem

Corporate governance has shown “no real improvement” over the last two decades and continues to pose a problem globally, says Templeton’s Dr Mark Mobius.

Supply lines

The Bank of England last week signalled its intention to continue with its £125bn quantitative easing strategy.


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