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Tenet sets aside £4.5m over Arch cru and Keydata

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Tenet has set aside a total of £4.5m to cover the cost of compensating investors under the Arch cru redress scheme and its settlement with the Financial Services Compensation Scheme over recommending Keydata products.

The company has not provided a breakdown of how much of the provision relates to Arch cru and how much concerns Keydata, but says Arch cru represents the “larger part” of the money it has set aside in its annual accounts for the year to 30 September 2012.

Speaking to Money Marketing, Tenet group finance director Caroline Bradley says: “Tenet has made an exceptional provision in its annual accounts of £4.5m. While we have £24.4m of cash held on the balance sheet, for us this is a significant provision for a group of our size.”

She says the different provisions for Arch cru and Keydata reflect the group’s different approach to the investments.

Bradley says: “We gave very restricted approval to a handful of appointed representatives for Arch cru, whereas Keydata was not generally approved by us, however a handful of ARs did conduct limited business.”

Tenet is not expecting to set aside more money in future in relation to Arch cru and Keydata, saying it believes its current provision is “sufficient”.

Tenet’s full report and accounts will be available next month after shareholders have seen them first at the company’s annual general meeting at the end of June.

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. Taken from M&E Approval List 10th June 2013 at 11:29 am

    Approval: The Keydata Extra Income Plan 7 is approved for members the M&E Network. You should ensure that you provide clients with the FSA factsheet on high income products entitled “Make sure you understand the risks”.

    Members should note that a full précis of current, reviewed structured products is available in tabular format on the extranet detailing underling index, risk profile and product objectives.

    As no client specific illustration is provided for this type of contract, you must disclose the amount of commission to be received prior to the client completing the application form. Confirmation that this has been done must also be evidenced on file; this should be by the production of a written statement, provided to the client prior to completion of the application form, detailing the amount of commission to be received. Example wording for the disclosure of commission is shown in the Suitability Letter Paragraphs.

  2. What is of particular interest here is that firms are either putting aside or have already paid significant sums to the FSCS to cover these problems. I leave aside the usual arguments, but instead would point out that payments and provisions to the FSCS reduce the tax bill. So one wonders what the total tax leakage will be as a result? And this at a time when HMRC is trying to wring every last penny from the system.

    Am I alone in finding this an interesting conundrum?

  3. Captain Codpiece 10th June 2013 at 9:33 pm

    The tricky thing about the ArchCru funds is that many of them were available via a number of platforms so, unless Tenet issued a blanket veto on using them as part of a diversified portfolio and checked all the funds selected for every investment application via a platform, they couldn’t have known at the time who may have been recommending them.

    And yes, as noted above, the KeyData Extra Income Plan 7 most certainly was on Tenet’s approved panel for a while, so it’s a bit disingenuous to claim now that “KeyData [products] were not generally approved by us”. I for one wouldn’t have recommended it (just once) if it hadn’t been.

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