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FSCS hopes to recover £75m from Keydata battles
by Michelle Abrego on Feb 06, 2013 at 15:22
The Financial Services Compensation Scheme (FSCS) has issued a £76 million levy to investment intermediaries for 2013/14 and announced that it is hoping to recover £75 million from its efforts to pursue recoveries on Keydata.
In its proposals for its 2013/14 plan and budget, the FSCS said financial services companies will pay £311 million to cover costs of compensation, up from £265 million in 2012/13.
The FSCS said it is expecting to recover £75 million from the assets of Keydata Investment Services and the underlying investments and claims against the advisers that sold Keydata over the next two to three years.
It added that it was monitoring the costs of pursuing those advisers, after its costs for recovery in 2012/13 rose from £3.8 million to £7.7 million, with similar levels expected in 2013/14.
It did not disclose how much it has recovered so far, saying only it is 'claiming significant recoveries' from both Lifemark entity and adviser firms.
‘This requires significant investment in preparing and prosecuting claims against intermediaries in particular, but FSCS has been keen to apply a commercial analysis to its approach to recoveries in the interests of the levy payers,' it said.
A spokeswoman from the FSCS said that the £75 million does not include the £30 million recovered from Norwich & Peterborough Building Society.
For 2013/14 the FSCS said it continued to see significant claim volumes within the investment intermediation sector arising from the defaults of Worldspreads, Pritchard Stockbrokers and other investment firms.
'Volumes of claims arising from smaller stockbrokers and general investment claims look to remain about the same next year. This is an area where we have seen the most volatility of claims volumes and impact of larger failures in recent years, so our assumptions are subject to change,' it said.
Life and pensions intermediaries have seen a significant increase in their portion of the levy from £46 million to £17 million.
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