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FSCS Keydata legal costs swell to £20m

FSCS Keydata legal costs swell to £20m

Costs incurred by the Financial Services Compensation Scheme (FSCS) in recovering payouts related to Keydata investments are set to rise to up to £20.2 million, according to a Financial Services Authority (FSA) consultation on FSCS management expenses.

The FSA is consulting on FSCS management expenses of £74.4 million for 2013/14, including a budget of £7.2 million for ‘legal and other professional expenses to pursue recoveries, including in respect of Keydata’. That provision comes on top of £7.7 million of recovery costs in 2012/13, largely due to Keydata, and £5.3 million in 2011/12.

Since paying out nearly £300 million in compensation to Keydata investors, the FSCS has been attempting to recoup those costs, launching legal action against advisers which sold the investments. Its largest recovery to date remains the £28 million received from Norwich & Peterborough Building Society, the biggest seller of Keydata investments.

The proposed budget of £74.4 million FSCS management expenses represents a 10% increase on the £67.4 million forecast to be spent during 2012/13.

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