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Revealed: FSCS pursues AWD for £8.6m in Keydata costs
National IFA AWD Chase de Vere’s exposure to SLS-backed Keydata products has cost the Financial Services Compensation Scheme (FSCS) around £8.6 million in investor payouts, documents from FSCS lawyers Herbert Smith have revealed.
AWD’s exposure is the largest of any firm listed in the documents to SLS-backed Keydata policies, with 640 of its clients receiving compensation over the investments. The documents are contained in a letter written to over 500 firms with SLS-backed Keydata products by Herbert Smith, which is recovering costs from the payouts.
The list includes large and small advisers, wealth managers, and a platform, spelling out the particulars of its claim against them as the firm seeks to reclaim some of the hundreds of millions it paid out in compensation as a result of the collapse of Keydata.
It includes the names of thousands of investors, details of how much they have claimed from the FSCS and the firm that advised them.
Other advisory firms whose burden on the scheme topped a million include Aegon-owned Positive Solutions at £1.3 million, Ashley Law with £1.6 million, Financial Management Bureau at £1.4 million, Financial Tax and Consultants at £1.3 million, and Birchwood Investment Management at £1.1 million.
The list includes a number of high-profile firms, such as Lighthouse Temple and Falcon (£254,193), Jelf Financial Planning (£29184), Origen (£73,278), and Sanlam Private Wealth (£61,548). Discretionary fund managers Rensburg Investment Management and platform Transact also feature on the list.
The letter, and accompanying list, marks the third time firms have been contacted over Keydata exposure. In October Herbert Smith wrote to firms outlining its grounds for recovery of the money, and argued it had a good case to make claims against advisers who sold the policies. That letter was sent to advisers with exposure to both SLS-backed and Lifemark-backed Keydata policies, although the most recent list applies only to SLS-backed Keydata policy sales.
The lawyers have argued advisers had been negligent in selling Keydata policies, made false statements about the risk attached to the policies, breached conduct of business rules and breached their contracts to take skill and care when advising clients.
Prior to this some firms which sold Keydata investments received a letter from the Financial Services Authority (FSA) which told them not to take ‘any steps which are likely to reduce the level or quality of its assets’. It asked directors to give the FSA prior notice of ‘any asset distributions, any material changes to the capital structure or remuneration policy, or any other significant alteration in the composition or quality of the firm’s assets’.
A spokesman for AWD said the firm had received the letter but could not confirm the accuracy of the FSCS figures for investor payouts.
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by Michelle Abrego on Dec 05, 2013 at 16:07