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Whitechurch wins NDF appeal as FSA backs down

Seager says he will fight for compensation from regulator after case costs firm 100,000

Whitechurch Securities has succeeded in its appeal against an FSA order that would have forced it to write to all its clients.

The FSA’s supervisory notice related to a mailshot by the firm in February 2004 which the regulator said gave such a positive spin on a product that it diminished the warnings contained in the literature.

The structured product, an NDF income and growth plan, subsequently failed, leaving investors millions of pounds out of pocket.

The FSA ordered White-church Securities to write to all its 1,000 clients who may or may not have bought NDF bonds through the IFA to offer them a financial review.

Most sales were through direct mail arm Whitechurch Investment Services which Seager, due in part to the FSA investigation, shut down. WIS was declared in default in January 2005.

Whitechurch appealed to the financial services and markets tribunal and the FSA backed down after it was found that only six clients were affected.

Chief executive Kean Seager says the case has cost him around 100,000 and it would have been far less expensive if he had been able to contact the six clients at the time.

He says he will fight for compensation from the regulator for resultant financial and reputational damage either through the tribunal or the FSA’s internal complaints procedure.

Seager says: “The implications of this very public affair go far beyond six clients. It was with this in mind that we took the steps to take the FSA before the tribunal. We wan-ted to clear our name in court but it seems that the FSA has decided to sidestep the issue and withdraw its notice.”

FSA spokesman Robin Gordon-Walker says: “We have withdrawn the notice after information coming to our attention in December that this would affect a far sma- ller number of customers than was first understood.”


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