FSA says it was 'pro-active' in tackling Keydata

That's my boy - give it to them Harry.

Shame the answer was not "honest" in that the FSA failed miserably before the event!!

If it was PRO ACTIVE then how come it didn't spot the problem earlier ? If it was PRO Active then they shuld have seen problems years ago.

Failed system by a failed regulator.

We must change the whole system or this is just going to happen again and again no mattewr what the FSA say as it is virtually impossible with the present system to stop all these goings on.

NOT however, proactive in examining, approving or momitoring the products, the structure, the due diligence, the management, or anything else connected with this sorry and shabby episode.

How can this happen?

Easily, when the regulating authority doesn't have a clue what or how it's supposed to be monitoring and regulating.

Apart from it's bloated remuneration packages that is.

To quote from a previous scandal "He would say that wouldn't he"

Good grief -this is unbelievable. Do they really believe what they are trying to say here?

Incidentally, the vast majority of the 16,500 FSCS claims "reviewed" were related to lost ISA status - hypothetical tax on zero interest and no gain (already known) and probably massive losses of capital for all of us. It would appear that the only proactivemness going on here is an attempt to cover up the gross incompetence of the FSA by meaningless spin and self-congratulation.

There is remains £500M of UK savings either lost or at very serious risk of being lost. About £40M has been paid out in compensation.

We victims do not see this as Pro-active - we see it as seriously lacking in any perceptible helpful action at all.

Isn't one of the FSA's key objectives supposed to be to protect people like us?

Just like the previous government - Reactive, NOT proactive !!!!

The article reads that they were proactive in this matter by calling the company in to administration in June 2008.

I do beleive I have read an article on this site relating to the compnay paying income from its own funds whihc it had been doing since the Autmun of 2008. I also beleive this site has recorded that the gentleman in question who misappropriated the money from the Luxembourg fund had acriminal record long before he started his relationship with the now collapsed company.

The structures that failed were avaialbe to view by the HMRC and our diligent proactive FSA were able approve or disapprove.

Perhaps I've been dreaming all this, whilst sat in a plush office overlooking the gently flowing Thames, whilst sipping my bubbly at yet another buffet, whilst my pension ticks up a few more 000's!

Come on Mr Pain be honest. We have a rule of honesty and integrety within this industry it is a shame the same is not to be said for our regulators. You made a mistake, we all do from time to time, but lets start hearing why the mistakes were made so they do not happen again.

Well done Harry, he certainly is looking out for his clients interests far more than the FSA is.

Well done Harry for getting some comment from the FSA on this issue.

This is mroe than they have said at the FSA publicly on the Keydata debacle for ages.

If the FSA were truly proACTIVE, they would have looked at the implication of their actions before pulling the plug and once they had done so, they would have ensured consumers (and their advisers) were kept informed as much as possible instead of leaving them in what is a very stressful situation with little information coming out in a situation whic Mr Pain himsefl says is "very complex"

Lastly, correct me if I am wrong, but it was not a £5million pound tax bill, it was a POTENTIAL £5million tax bill and discussions were taking place between Keydata and HMRC about how to resolve the issue.

I take my hat off to you Harry, you do put yourself about and get under the skin of people. Maybe we should all be a bit more proactive and attend such meetings.

Come on FSA come clean on what you knew about Keydata before you put it in administration. You (FSA) are paid to protect Investors and you have failed. The government Conservatives as well as Liberal Democrates need to be more proactive in sorting out the mess the FSA has left a lot of Keydata investors in. So come on Mr Cameron and Clegg get involved, you are their bosses! Well done Harry

Thank you for the support, but that’s not the issue.

Pain did a snow job. He didn’t answer the main point about ‘What does this do for investor confidence? As Peter Hilton has said the claims paid relate in the main to non compliant ISAs. Pain was being extremely disingenuous about this.

True SOME non ISA clients have received compensation. How come? Because the FSCS are playing silly buggers. If you put forward the right story they will consider the claim and pay out, but if you don’t know what that story is you are left to hang out to dry.

Mr Pain didn’t bother to explain that piece of chicanery.

Look as they say ‘shit happens’ OK so move on. But get the poor buggers who have lost out sorted IN QUICK time and don’t just sit there passing the parcel as if you were at an Afghan birthday party.

He said it was complicated. OF COURSE it’s bloody complicated, that’s why you have such a big salary – you are supposed to be able to sort it out.

For God’s sake when will the excuses stop and some positive and effective action be taken? After all isn’t that what regulation is there for?

How many Managing Directors does the FSA have on bloated packages waffling on about how well they have done.

What garbage! They only act after the mess has ocurred and even then only very badly.

If any managing director in the private sector was so lacklustre and only reactive to problems after they had arisen they would be fired.

What happennedto the concept of responsibility with big pay and keeping your eye on the Companies before they go bust. The FSA call it due diligence when they are throwing it at us. What their due diligence and their responsibility to investors as a first priority

We Keydata victims really missed a trick in not going en masse to this beano.

"What a Pain" was answering the wrong question. Why did the FSA not make Keydata write to all the bond holders in Dec 2005 like KPMG asked? The Keydata brochures stated that KPMG were practically running the show, as the FSCS acknowledge.

Harry:

Nice to hear you are not pussy footing about ! There has been far too much of that over the last 12 months

.

Snow job it was -and very disingenuous indeed, But let's be fair - maybe at Mr. Pain's high office he actually hasn't a clue was has REALLY gone on at all and is just passing on bullshit he has been fed by his £200K/year lackeys who didn't want their £100K bonuses reduced.

In regard to the 12,000 or so "successful" Lifemark ISA tax compensation claims*(see below) he waffled on about - these didn't and won't cost a penny of anyone's interim levy - there will be absolutely no compensation paid because there will be no tax liability because there will be no gain to attract tax and (we suspect) little or no return of capital as well, And I don't think we will even be able to offset this as a capital loss - because our lost capital was supposed to be within an ISA.. But 16,500 claims "reviewed" looks good doesn't it? Somebody's been very busy. Pity they have achieved so little. Truth is - they don't want to sort this out - this is a potential £400M compensation bombshell - best to pretend it doesn't exist.

* For those not fully up to speed Keydata sold about £500M worth of ISAs which were not and never could be ISAs. They knew about that but did not come clean about it.. Keydata was a disgrace and was left in business for far too long.

Peter Hilton

Are you the Barrister or the Mathematician?

Don't follow how the ISAs don't cost a penny on the levy. I thought that's exactly what the last levy was all about. Can you explain?

By the way of course I pussy foot - the name is Katz after all! (My nickname at school was Pussy).

The F.S.A. should disqualify anyone from the financial industry who has ever been a director of a bankrupt company. This would have prevented Stewart Ford from starting Key Data. In my business I never gave any company or individual a credit account if they had been associated with a bankruptcy.I found from expensive experience that there are many serial bankrupts, most, but not all, were reckless or dishonest.

Harry; The 16,500 or so claims Pain refers to are called by HMRC "Category 1" and "Category 2" Claims. The Category I claims (about 4,500 souls) relate to the SLS/Elias fraud. Some have been paid their compensation (including the Category 1 ISAs - these were paid on the nod) and some non-ISAs have been turned down because, as you say, the poor old pensioners didn't know the magic form of words to use on their application forms (FSA/FSCS 1; Bewildered Pensioners 0) The (first!) interim levy was intended to cover these claims - about £48M so far, I believe. But over £100M was stolen - bit of a gap there.

The category 2 claims (about 12,000) are related solely to the the loss of ISA status for the 5-year Lifemark-based Plans.They are all about paying personal tax, as it might be incurred, direct to HMRC by the FSCS which the claimant would have been liable for ( if there had been a gain or an income paid out, that is) because they were sold non-compliant ISAs (as were all the cat 1s, of course). Since there will be no gain or income for all cat 2 claimants there will be no payments by FSCS to HMRC at all - hence there will be no drag on the levy system in this respect - now or throughout the remaining cat 2 five year period.. The 12,000 claims in this category were a complete farcical waste of time and paper. Including them as some sort of achievement of the regulatory/compensation system is a dishonest piece of goobledegook.

Now, however comes the big one.

The capital invested by all Cat2 Plans (Lifemark 5 year) and a Cat 3 (Lifemark 7 and 10 year) is now seriously at risk - always was - but our esteemed administrators have only just sussed this out. Seemed obvious to me last August.

This compensation package could easily exceed £200M (£350M was invested in these Plans).

I don't think they want to know about this one and I expect they hope that we will not notice we have lost our money and have been badly let down by our regulatory system.

Peter,

When we IFAs paid a levy of £48m to the FSCS we had no choice, no consultation and no rights. Most of us never adviser any client to invest in this toxic rubbish but we still had to pay. From what your posts infer I need to set aside another £15-20k for the next wave. Please advise.

My posts do indeed infer that there is another £200M to £350M compensation to be funded from somewhere if the Keydata scandal is to be sorted out to anything approaching the "victims" satisfaction.. I call it " phase 2 - the Lifemark phase"

The Interim levy only ever covered the category 1 claims (phase 1 -SLS - David Elias fraud) - and not even all of those have been paid yet as Harry has pointed out.

Peter. Thank you for that.

Yes I too realised the enormity of the shortfall. In my view the only real chance that the poor investors have of recouping their capital rests on the FSA admitting they were wrong. This is a huge ‘if’ as Canary Wharf often seems to mistake themselves for the Vatican.

If they do (admit they were wrong) then the door is open (perhaps) to re-categorise Key Data as a provider and the levy could then be raised from a broader and richer base.

Failing that I wonder if the powers that be could just declare that they are raising a levy from the whole industry in direct proportion to their regulatory levy in order to compensate. This in my view would be the fairest outcome – we all pay. If and when they recover assets these can then be used to defray future levies and regulatory charges. If there are trade creditors there should be some way for the liquidator to tell them to jump in the lake – at least they will get tax relief on the loss. As for Mr. Ford – why isn’t he extradited, prosecuted (and/or fined) and if found guilty have his world wide assets sequestrated to add to the fund to defray further industry levies – for which we would have laid out in the first place. Finally there should be a cap on the liquidator’s expenses to encourage a somewhat faster progress. The current system actually encourages these people to work as slowly as possible. I am glad to see that there is now some investigation into the insolvency practitioners rip offs, but this only concentrates on fees and seems to miss the point of the link between fees and time.

Some of this compensation in all logic should come from the regulator themselves as they have yet again shown huge failings, but unfortunately that would only be a circular argument as we pay for them anyway. The Government is hardly likely to want to get involved as they are trying to manage austerity measures.

Plagiarising the old advert – “The future looks bleak, Henry”

in regard to compensation there is a very big difference between the SLS/Keydata phase (phase 1) and the Lifemark/ Keydata phase (phase 2)

Stewart Ford claimed he operated at arms length from David Elias - and said he was just marketing SLS bonds in Keydata wrappers. He has used this to isolate himself from Elias where it suited on several counts. He didn't notice that the SLS bonds had not been registered (essential fo ISA staus) and he didn't notice the theft of £100M for 8 months apparently - nor did he wonder where £4M of SLS income had gone from his P&L account - but he paid it out to his clients anyway. He did however lend Elias £5M. So they might have been quite close. It is this supposed separation which has I think caused the FSA to judge that Keydata was operating as an advisor in regard to phase 1..

The Lifemark phase would appear to be very different.

Stewart Ford set up Lifemark. He owned it and ran it (together with a labyrith of other offshore companies through which he squirrelled our savings) It is difficult to see how the FSA/FSCS can say he was anything but a product provider, or that his left hand did not know his right hand was in the till.

Still you never now - the Vatican and the FSA can make up the rules as they go along- and are not to be questioned.

Rubbish - John Pain is either completely misinformed by his own people or deliberately lying. Keydata didnt have a 5 million tax bill which was the principle reason for its administration. I also heard that when the FSA informed Keydata directors they were going to place the company into administration they refused to allow the Keydata directors to make representations to Pain and Senior FSA management.

The FSA and Pain have acted outside their remit and in so doing have placed investors money at further risk.

I wish I had faith in any of these arguments, it seems to me the FSA have failed in the role of regulator, don't companies need to submit requests to be regulated, is there no back ground check to see if they are fit and proper.

Are we to believe they just create rules and regulations and agree to any company setting up, but you should accept these rules and if we catch you breaking our rules we will fine you.

To big to many plates spinning