Law firm sees increase in worried Keydata IFA firms

Regulatory Legal is receiving hundreds of calls from worried IFA firms who have sold Lifemark-backed Keydata products.

In October, the Financial Services Compensation Scheme (FSCS) issued litigation action against IFAs who sold investors both SLS and Lifemark-backed plans.

The ‘letter of claim’ sent by Herbert Smith, which is acting on behalf of the FSCS, sets out the intention of the FSCS to recover payments from IFA firms.

Regulatory Legal claimed the “basic allegation” is advice to clients was negligent and IFA firms should repay the FSCS.

The law firm estimates around 2,000 firms have sold these products and it is taking calls from IFAs who are worried about their insurance and their future viability.

Regulatory Legal has invited IFAs who are being affected by this to have meetings with them to run through the issues.

Gareth Fatchett, director of Regulatory Legal, said: “We are being called all the time by worried IFA firms who have sold Lifemark backed Keydata products. The firms are concerned about their insurance, their future viability and whether or not other products will face a similar fate.

“We expect there to be a significant increase in the number of firms either ceasing trading or considering themselves insolvent. Quite how this produces anything other than a further mess, we fail to see.”