Details of Keydata rescue deal rejected by FSA

Stewart Ford proposed the deal to the FSA and PwC, Keydata's administrator, at the end of June 2009.

Mr Ford said the deal was designed to prevent investors suffering captial loss as a result of the misappropriation of assets from SLS Capital, while continuing to receive income payments.

He proposed to finance the rescue through the transfer of a life settlement portfolio from the Ford family trust.

A new company would have acquired the rights and interests of investors in the SLS Capital bonds in exchange for new bonds backed by a new portfolio of life settlement policies.

Mr Ford's plan was then to sell high quality individual policies from the Ford family trust and to use part of the proceeds to fund income payments at the 7.5 per cent originally promised.

Mr Ford said the FSA rejected his proposal without even considering whether the affected bondholders should be informed.

Investors have since received compensation under the Financial Services Compensation Scheme but only capital losses have been covered, up to a limit of £48,000 per investor.

Mr Ford said he was "utterly determined" the situation was not repeated with Lifemark, which was why he had chosen to release the details of the SLS Capital rescue now.

"To this day, the FSA and PwC have not offered any explanation as to why they rejected the SLS Capital rescue proposal; however their reasons are clear enough to me - it simply didn't fit their respective agendas.

"From the FSA's perspective, it is critical to vilify me to justify the ill-considered and extreme action they took in placing Keydata into administration over an alleged Isa regulation compliance problem, which we maintain could easily have been resolved with HMRC were it not for the interference of the FSA."

The FSA said Keydata was placed into administration last June by the High Court and at no point did the management of Keydata oppose this application.

It said on the basis of the information Mr Ford provided to the FSA at the time about his proposals to rescue SLS, the FSA was unable to conclude that it was in the best interests of investors.

A spokesperson for the regulator said: "Mr Ford is under investigation by the FSA and our concern about him is a relevant factor we have to consider in the context of any proposal he puts to us.

"We continue to work closely with Keydata's administrators, the Luxembourg financial services regulator (which regulates SLS and Lifemark) and Lifemark's provisional administrator in Luxembourg.

"The protection of consumers is at the forefront of our minds when considering any proposals."