Non-ISA Keydata clients awarded compensation

What happens when an IFA turns round and says that their advice to a client was influenced by a statement in teh brochure about KPMG and that had the FSA made the adviser aware (as the FSA new) that this statementw as wrong, they would immediately have reviewed the suitability of the original advice?

It seems to me, the FSAs failure to inform IFAs through an appropriate medium that they had been told by KPMG that incorrect statements had been made about them, that the FSA failed in a duty of care to those it has contracts with and pays money too, i.e. IFAs......

Of course this would achieve nothing all the time the FSA and its staff carry no responsibility for their actions (or inactions in this case) and in fact leave with golden handshakes a la Clive Biault....

The FSA was informed, in 2005, that Keydata literature contained "misleading statements"*. And the KPMG reference was not the only "misleading statement" in the Keydata marketing literature they were told about at that time - in very plain words.

They kept this disturbing information to themselves - and Keydata went on to suck in a further £350M of UK savers money over the next four years - now all at risk..

In my naivity I had assumed that the FSA's immunity from legal action was so they could, without fear of redress, tell us about the dodgy characters they came across in their regulatory duties. But no - it appears to be to protect them from any redress from angry and impoverished UK consumers. So they can be as incompetent as they like,and carry on regardless.

Thi is a direct extract from Secure Income Bond Issue 2. We did not arrange any of these for clients, but still kept copies as part of our research.

The return of your capital does not depend on the performance of the stock market but at the rate at which

the insurance contracts pay out within the bond. Because it is possible to ‘model’ how insurance contracts

mature, the risk level of the Secure Income Bond is reduced because the returns are more predictable than

with stock market investments (the Secure Income Bond uses an actuarial model developed by KPMG).

Work by KPMG shows that differences from the model become unimportant once a large number of

contracts are held in the portfolio. In order to create an immediate spread of contracts the Secure Income

Bond will invest in an existing portfolio, creating the diversity required by the KPMG model. The risk to your

investment is whether the companies issuing the insurance contracts default on their financial

obligations – or put more simply go into liquidation.

Unless any IFA who had read the previous brochure been informed through of teh inaccuracies of the previous booklet, one could argue that although not appearing in this booklet, teh fact the miselading statement had not been pointed out to IFAs, by either Keydat or FSA, they both became party to misleading advisers and their clients by their ommission.

"The return of your capital does not depend on the performance of the stock market but at the rate at which

the insurance contracts pay out within the SIP. Because it is possible to ‘model’ how insurance contracts

mature, the risk level of the SIP is reduced because the returns are more predictable than with stock market

investments. The Secure Income Plan uses an actuarial model. This research shows that differences from

the model become unimportant once a large number of contracts are held in the portfolio. In order to

create an immediate spread of contracts the SIP will invest in a new portfolio, creating the diversity

required by the model. One of the risks to your investment is whether the companies issuing the insurance

contracts default on their financial obligations – or put more simply go into liquidation. Please refer to

page 11 where the risk factors are explained in more detail.

You should be reassured that 90% of the insurance contracts within the SIP will be issued by financial

institutions with a minimum credit rating of ‘A’ (Source: Standard & Poor’s or equivalent).

Strange....is this the same Chase de Vere that used to carry out mass mailings of this type of product and indeed got fined for mis-leading information!!??

Is this the same Jason Walker that was employed by them at that time?

Poachers turned gamekeepers I'd say!