PwC racks up £1.94m in Keydata fees

No surprise there then. Want to bet that at the end the bill will be around £5 million or 1.5% of the amount invested (£350 million).

Nice work if you can get it, pity that those who actually lost out are not as assured of getting anything back.

If the OFT want to look at something really worthwhile perhaps it should turn its attention to the way insolvencies are handled. It seems to pay the Insolvency Practitioner to make the matter as drawn out as possible in order to 'make a killing'. What oversight is there to try and at least ensure that he is working as fast and as economically as possible? Is there a set level of charges? Is there competitive tendering, or is it just a field day for those who win the work?

Don’t forget that at the end of an insolvency the list of payouts (as I understand it) is:

1. The Insolvency Practitioner

2. The Inland Revenue

3. The Bank (if applicable)

4. The secured creditors (if any)

5. The trade creditors

6. Then the poor old others, who in this case would be the investors.

If I have the order wrong no doubt someone will correct me.

I believe the insolvency practitioner is now second in terms of repayment behind secured creditors, and HMRC have taken 3rd place

That's an average hourly rate of £323 or £2584 per day assuming 8 hours are worked.

I must review our fee scale, I can't be treating customers fairly as I'm clearly not charging them enough!

They charged £11500 for 62 hours worth of secretarial services! This makes charges in our industry look very cheap!

I think you'll find anon 1 is right Harry.

I have just recived a copy of PWC's six monthlky report to creditors and the mroe I read it, the more the problem is actually in Luxembourg as all the money is there in SLS (well nto there in that case), Hometrack and Lifemark. the administration in the UK is looking at the Iceburg and re-arranging the deck chairs on the Belgrano, when it is actually the Titanic which is sinking! It doesn't mean that both are not disasters, but.....

This is as good as a seat on a Quango, and again seems to be a better hourly rate than the P.M. gets.

I wondered how long it would be before someone related the rate of pay to that of our Prime Minister (thank you Anitaki)

What is this absolute obsession with remuneration in relation to that of the PM?! It seems that people simply don't like others having success. The process relating to Keydata and indeed any administration of a company that size is drawn out, complex and will take time and skill to resolve. PwC wouldn't have their prestigious reputation unless they were very good at their work.

So a company (PwC) makes a decent profit on work carried out. What's wrong with that?

And here we have the truth – who is the beneficial of fraud?–Keydata or the army of regulators, accountants and lawyers who often earn far more than the fraudsters?

Come on FSA, surely you can drum up some more business for poor old PwC, their fee income is starting to wain a lttle bit??

What else are you NOT REGULATING right now Mr FSA that will be the next KEYDATA or Equitable Life or Banking failures to increase the IFA share of the fees and dump this failure on IFAs!!.

Our rising FSA and FCSC IFA member fees show a direct correlation with PwC's rising £Million fee work which in turn is directly positively correlated with rising FSA rising costs. Fit and Proper FSA regulation means these fees dont arise in the first place!!!

They are all POSITIVELY CORRELATED with the Failure Of UK Financial Services industry under your watch, Mr FSA, Mr Sants!!

These are all negatively correlated with how successful the FSA has been in its role as 'champion of the consumer.'

Repeal FSMA 2000 now, stand aside FSA, you are not fit for purpose!!

Thank you CCR for a balanced comment.

Harry and Co - before you spew about the audacity of PwC to charge such fees you should really understand not only the role but the risk that the job entails. There is a reason only certain people can do it and that they have to be appointed commensurate with the complexity of the case.

If it is the quantum of the fees that grates then perhaps the thing to do is get appropriately qualified, gain the experience, accept the risk, build the infrastructure to deliver the service and then pitch for the next job that comes along.

We have to accept that our industry is simply not valued.

We look at these fees. Similarly we look at the costs of running big trials. We wonder how such fees can ever arise - or be allowed to arise. How much of these fees were down to the expert witness testimonies of professional financial planners, as opposed to accountants and solicitors?

The bottom line is that there is a closed shop out there and we can't get in as things stand. Solicitors and accountants are in there, it's a sweet shop and they are scoffing the lot!

Now everyone reading this will have great true stories of how they have helped people. Those clients that we have helped value our industry.

I have had a newly retired pensioner in tears because they were just so pleased at what I managed to do for them (just by getting an extra £5,000 for them from their pension that everyone had miscalculated/overlooked). I have turned up at a client's 60th birthday party with £140,000 for them after they had just had a heart attack - much better than the traditional bottle of malt! And I am nothing special. So just take some time to think about all the good that you have done.

We are all much better than even we think that we are.

But my guess is that the vast majority of those who work for the regulator own no life assurance, won't deal with a professional financial planner and don't believe in what we do.

Accountants and solicitors in general look down their noses at us. Our public perception is low.

Yet we do all this good work.

And if we want this perception to change, then we will have to change. The difficulty is in deciding what change will bring about the raising of the barriers.

In my opinion, the change will have to be qualifications based, because it is the only tangible change. Membership of CII, PFS, MDRT etc are all good, but not exclusive.

I suggest that the Charter is the only current qualification that will ultimately matter - until some numpty in CII decides that they could squeeze more fees by making charter holders renew it every year e.g. CFP 2010, CFP 2011 etc (which would be good from the CPD perspective, but bad from the new holder's perspective, having done the work to obtain it in the first place).

I said many years ago (and was unpopular for saying so) that it should be AFPC or out, with perhaps 2 years to obtain it. This was shouted down by the powers that be (or were then) as they reckoned we'd lose too many advisers.

Well, by wandering around like headless chickens, the advsory community has reduced from around 400,000 at its peak to less than 70,000 with only 20,000 or so actually working fully.

We need to work together to make this industry a respected industry.

In saying so, to be a life insurance salesperson is one of the most sought after careers in the USA.

And we are better than that!

To Christopher Crichton-Rankin

Jul 08, 2010 at 12:15

I wondered how long it would be before someone related the rate of pay to that of our Prime Minister (thank you Anitaki)

What is this absolute obsession with remuneration in relation to that of the PM?

Its called a waste of money that you are blindly paying for!!

Its called lack of any fit and proper FSA regulators who should be preventing this but are paid handsomely for failure.

Proper FSA regulation means no 'unnecessary' fee work for PwC arises to begin with (period)

Comparing David Camerons £144,000 salary with FSAs Hector Sants salary of £754,000 IS VERY relevant to the scrutiny of the FSA who should be policing the likes of Keydata correctly in the first place!!

It takes David Cameron 5 years to earn what Sants earns in 1 year. To make the point simpler, that's equivalent to being richly rewarded for failure oat our (IFA) expense!! The rsing cost of FSA regulation and failure is destroying the financial services industry in a time when the country needs more effective and less costly regulation to survive.

Its the best and most prominent example of the waste we have in this industry of how out of touch the FSA is - if you cant see that as an IFA and you financially agree to pay for such failure without asking why, then you will get if the type of Financial Services Industry you deserve for such appeasement and lack of understanding!

.

Some interesting observations on charge rates!

If you consider there are roughly 1700 chargeable hours in a year you can probably work out the equivalent charge rates for successful salesmen in our industry. Business production targets for some of the top London IFA Wealth Management firms are circa £500,000. Not difficult maths but don't forget within the 1700 hours there will be down time for studying, research, jollies (I mean corportae entertaining by providers) travel time and of course time spent on running a business - none of which is chargeable to a client!

Time to re-think IFA hour charge rate equivalents!

I am personally distraught that I as an IFA, was led to believe that this company (KEYDATA) and its directors had the appropriate expertise and prudent management skills needed in order to ensure that investors money was as safe as humanly possible to make it and that those counterparties they dealt with had proven bona fide qualifications to interact with and provide the company what the investors required.

That the directors of the firm have proven themselves to be a bunch of incompetant, imprudent tossers (as we say in the cold dark north) is beyond doubt. (sue me for defamation if you wish, my opinion is based on their failures and I have nothing anyone could take from me that is of value, other than my good name and that remains unsullied)

IFAs can never trust anything any provider says now and we need to carry out a lot more research into those who head the providers of financial products, before we encourage our clients to invest their hard earned savings.

I am also very upset at the attitude of the FSCS, Keydata was declared "in default " in 2009 and still investors have seen no sensible attempt to get them their money back.

I can now understand those IFAs who, like me, may have been in the industry for 30yrs or more, seriously considering leaving and taking up Woodturning to supplement their income in retirement.

Wood is an honest medium in which to invest, the directors of Keydata should be banned from ever running a financial company again and all the millions they awarded themselves in bonuses should be returned to the firm so that investors can get their money back.

On the whole I can understand why the general public is not enamoured of our industry when events like these occur through a lack of attention to detaila, imprudent management, bad judgement concerning counterparties who they bring into the plan.

PWC needs to also get its act together and come up with a rescue plan to restore clients confidence, not just charge excessive and wholly inappropriate fees for no results.

Please don’t misunderstand me. It is not the charges per se that give me cause for concern or complaint. It’s just that these charges will no doubt be at the expense of those who have already lost money.

When a commercial organisation goes into insolvency and has only trade creditors it is bad enough if some of those creditors are small firms who may as a result go to the wall, but in the end that is business risk. For the others it is tax deductible.

But in a case such as this you have people who may have lost life savings, rely on the income to live or may have otherwise lost assets which they are unable to replace, claim tax relief on and are as a result in rally dire straits.

It is in these circumstances that I really believe that the current system is found wanting. I wish I was clever enough to propose a workable alternative, but at least I hope I have made the point.

Thank you tom those who have put me right on the precedence issue.

PwC spent 6,002 hours working on the administration of Keydata.

Its a shame the FSA didnt spend more than 2 hours checking Keydata out otherwise they would have done what my company did and refused to have anything to do with them.

To Anonymous 3,

I appreciate your points and thank you for making them. I should mention that I too believe that the FSA and Sants are a complete waste of time, but it is not the FSA being criticised here.

I'm just saying that when a private company performs a task they ought to be rewarded for it. If their business is such that a decent profit is made also, then three cheers to them.

The fact that the FSA didn't adequately regulate Keydata is a separate issue upon which I agree with you and the many other comments posted here. Sadly, Hector 'strange-smile' Sants has found another cushty job which he will no doubt under-perform in yet still be paid bonuses for failure. THAT needs to stop!

CCR and Mister Maker

The £323 per hour is an *average* rate that includes secretaries and graduate trainees as well as partners. I have read somewhere that Harry is well qualified (on paper as well as by experience) - so don't ask him to get "appropriately qualified" as he already is and I don't know of anyone in PwC as well qualified as I am: I shouldn't accept a fee of £300/hour if I was offered one (unless it was wholly or mainly as a small %age of the benefit to the client) because it feels wrong: once or twice a year I have to negotiate down the fee under a very old contract where the work required for a particular job has been reduced so much at the request of the end-user that, despite inflation, the fee seems excessive.

Insolvency practitioners do *not* generally charge £323/hour - the largest quoted Insolvency Practitioner has 511 fee-earners (plus 157 support staff) and turned over £69.5m in 2009/10 - that is £135k each which, at £323 per hour, would be just 418 chargeable hours. Do you think Ric is still hiring people to work an average 8 hours per week?

I don't think so.

I have no objection to PwC making a decent profit - I object to it (and many others in a similar situation) making an indecent one.

This is good work if you can get it, akin to 'an insurance job' for a mechanic. I never did understand in early life why, when I was told why public services were inefficient compared to private, it should ever be the case. Same people, same qualifications. It has become clear to me that anything that is handled at this level costs a lot of money and the cost is reflected is in that this is a quasi public service operation, albeit by a private company.

It's a fact of life and something which should be minimised. Should I say 'well done' to Citywire for highlighting this? There is a consistent theme, and I get the feeling that the crowd that assembles makes these articles more prelevant. Often I read them and feel wound up but is it not better to 'get on with it.'

We do our job through choice. If you choose to become an accountant at PWC you have a desk job - you always had the choice.

Mr Borgars

Thank you for your illuminating opinion. I won't press you on the "more qualified than anyone at PwC" which given that it employs over 110,000 people is a pretty bold statement but I would ask whether you are qualified to be an Insolvency Practitioner?

I'm surprised you find the charge-out rates for the world's largest professional services firm to be high - I'm guessing there are several thousands customers around the world who disagree.

Mister Maker

Firstly, if you quote me: please do so correctly. I did not say that there cannot be anyone in PwC who is more qualified than I am but that I do not know of anyone who is (the last person I met who was more qualified was the Organist at my previous Parish Church, but then she was brilliant): it is reasonable to say that Gordon Pepper and Colin McLean are better qualified and Nicola deserves to be (athough she is not because one exam was downgraded after I took it before she did). If you or Graham Ward or anyone there can produce an example of someone more qualified I shall be happy to acknowledge it because, quite frankly, I should prefer not to be "the most qualified person in financial services" as it makes me look like an academic oddball.

Secondly: no I am not qualified to be an Insolvency Practitioner (as you would know, if you had remembered early posts on this site, I started off as an Actuary instead of an Accountant). On the other hand, nor are most of the PwC staff: according to my latest copy of the R3 Directory they have - worldwide - 94 qualified Insolvency Practitioners:that is 0.085%.

Thirdly, in the case of PwC's handling of Keydata, those actually paying do not get to discuss the fees - and in a lot of cases the banks discuss the fees while the unsecured creditors are ignored.

The average IP takes twice as long to qualify as the average Actuary so I do not begrudge them a reasonable fee but £323/hour for an average for qualified, unqualified and secretarial staff? My local IP earns a decent wage but I have never seen him in a Rolls or any comparable sign of wealth, so I do not believe he takes anything like that from his clients: my only gripe is that not only does he beat me, fairly easily, over 10k but so does his wife!

Since the comments have gone down the earnings route, my main gripe about large incomes is they are rarely in the positive group, that is positive not a negative no relation meant to any firms within the industry.

I have noticed that they appear to be more prevelant in large numbers where there is an unfortunate victim, a captive audience of funders, little other choice, or where they are billing the state.

Shame really, it would be refreshing to see large food producers, green electricity producers, manufacturers etc and their skilled staff in these earning bands, people who create something or at least sell something real.

PWC are taking the p...ss. Dan Schwartzman is only concerned with his fees - hence his attempt to get a Hedge fund to do some dodgy deal to support Lifemark in return for a release of funds to PWC - which would have destroyed the investors value in Lifemark bonds.

they are just sitting there milking what is left of Keydata in every way they can to further their pockets.

the FSA is inept and incompetent - and is to blame for this abuse of administration.

I am an investor in Keydata. As a lowly paid Hotel Accountant (5.65p per hour was my rate when I retired 5 years ago) I baulk at the rates paid to even the lowest of those at PWC. My biggest gripe that I'm hoping PWC/FSCS will get sorted is the fact that I saved hard out of of £5.65 per hour to put money into an ISA from their very inception and transferred it all into Keydata so that the extra income would prevent me from having to claim benefits from the Government "just to live". It turns out that the investment that Keydata advertised was NOT an ISA. This means that they misrepresented their product and gave misleading information in their advertising. As such I believe that Keydata should be declared "in default" on these facts alone regardless of which Company they invested my money into.