FOS issues landmark ruling against N&P over Keydata

How does this fit in with the court case against the FSCS?

And, if the FSCS struggled with proving that Keydata was liable for the losses created by a third party how then can the FOS find an IFA (N&P for example) liable for that same loss?

There are many aspects of all this that Gareth and his firm Regulatory Legal do not appear to be covering, Anthony Speaight QC has been instructed to represent the IFAs in the High Court and he said to me "I would naturally be delighted if there is a fresh opportunity for us to be involved together again".

So the FOS is just a puppet of the FSA.

strange to call this a 'landmark ruling' when surely it would only be true for another claim that was exactly the same as this elderly couple. Same ages, same investment amount, same level of other savings and investments, same attitude to risk etc., as these are all factors the FOS would have to consider on an individual claim basis.

A bit early for the claims chasers to be celebrating having found the silver bullet on this one I think.

@Evan Oven An IFA can be liable if the advice wasn't suitable.

It is not very clear what N&P is saying, from what I know they cannot appeal the ruling, what they need now is to put their clients in the intial position and take ownership of the bonds they have sold to them.

N&P "IFA" - I think you may find that they were doing as they were told by their marketing department and line managers to keep their jobs. No doubt they were "trained" to sell these and thought they new about the products.

It seems to have gone like this our customers are not receiving any / enough interest from their savings accounts any longer. Here is a plan that will pay them the "income" they need you will earn a lot if you sell a lot (we are getting enhanced commissions from Keydata) so we get rid of a liability off our balance sheet get paid over the odds for selling these you get paid for selling it and the customer (mostly retired, elderly and trusting of their building society) is happy because they are getting an income to live off again and it is a safe product it says so on the leaflet.

The real scandal is that these people were "advised" to buy these products with all or nearly all of their money where is the investment planning and portfolio asset allocation ?

Shame that they took the larger upfront commissions with no trail and now have to find monies from somewhere for the compensation.

Considering the accounts for last year "acquired" monies from this years funds to make a profit last year, where else are they going to find the monies?

With the amount of cases they have, anybody want to buy a building society?

Eugen

Please do not assume that I am a muppet.

In my humble opinion all advice relating to the offerings of Keydata, MDF (sorry NDF) and many other manufacturers of 'structured products' could be unsuitable, even the FSA leaflet before me fails to mention the 'counterpaty' risk.

My argument is simply this, if the likes of Lehmans, Northern Rock, Bradford and Bingley and all the other financial cadavers littering the financial services market place fall over the FOS can look at something and say the advice was unsuitable because the risks were not fully explained when the regulator itself failed to spot the dead parrot..

Is that fair and reasonable?

Society is in dire need of regulatory balance, I see none.

Why bother with regulation when all we need is a great big compensation pot?

Evan you have hit it on the head All we need is a great big compensation pot cheaper than regulations.

Evan,

A great big compensation pot funded by a product levy would be even better.

Evan, I often agree with you, but not completely on this. This case does NOT set a precedent in my view as Stepehen Girling has said above.

The errors of Kedyata itseld has no relevance when looking at the complaint which has been upheld by the FOS over the issue of suitabilty.

This complaint could have been upheld whether the client lost £1 or their whole £28,000 if the advice was deemed unsuitable and could even be deemed unsuitable if the client actually made a gain! Do youy agree Evan? Not trying to be argumentative, just trying to look at it in the round to understand others opinions on this.

The thing is that if the investment has not run it's full term, how is the quantum calculated for the actual loss which has occurred?

If the consumer is paid the whole £28k quoted, do N&P get to keep the investment...

.....or it it a case of working out a value now when there may be no market for these investments now, so giving the client nearly the full £28k AND allowing them to keep the investment. This seems wrong but we've seen a precedent which put many good advisers out of business when people got compensation on endowments AND kept their investment to maturity and profited from this.

This should NOT be allowed to occur again.

It should be up to the loser (N&P) whether to pay compensation now to maintain income and at maturity any final shortfall to give the client what they thought they were getting

OR if N&P prefer and are willing to, to give full compensation BEFORE the end of the contract, but in lieu of the consumer keeping the investment, with the provider (N&P) holding tha asset until maturity for its own benefit having repaid the consumer 100% of their capital. (not sure if they'd want to keep it with all that is still going on with Lifemark though Eugen are you?)

This is what SHOULD have happened with the endowment debacle (not that I had any endowment complaints)

Surely the only fair way to N&P is to pay them the income they were expecting over the timescale and then pay them the amount they were expecting at maturity in return for the rights to the investments being transferred to N&P to do with as they wish?

It will be interesting to see what the FOS determination is as to how to resolve this issue fairly or will their actions simply prove (as some of as suspect) the FOS are NOT a true ADR system as they prefer one party over the other in their outcome when the result in law would not have been the same as that imposed by a court had either party declined true ADR?

The report refers to 'Keydata Products', but is not specific with regard to the product sold.

Bloggers are assuming, possibly correctly, but maybe not, that this customer was sold the 'failed' product.

I think I'm right in saying that Keydata has probably marketed in excess of 50 plans in it's existence, the majority of which have not failed in the way that the life settlement plans have, but if they did not deliver a positive outcome, and resulted in a complaint, still might be seen by the FOS as being unsuitable for a client's needs and attitudes to risk.

It would help all of us if Journalists could be more particular and specific in their reports, but maybe that's asking too much?

Perhaps it is a landmark ruling because an award has been made against an "institution" where advisers have to meet 'targets'. l refer back to yesterday's long thread re. Barclays- - perhaps thiis could be a precursor to banks having to Treat Customer Fairly and not targeting vulnerable elderly people in order that their sales staff meet these targets, irrespective of the quality of the advice given.

N&P were interviewed yesterday and said that they did not except the initial judgement and would fight it.