FSCS recovers £30m from Keydata estate
The Financial Services Compensation Scheme recovered £30m relating to Keydata Investment Service, its annual report and accounts for 2011-2012 reveal.
Investment advisers were hit with a £60m levy this year to cover combined claims made relating to Keydata, Wills and Co and the first Arch Cru claims, after the FSCS estimated needing only £40m.
Advisers reported they were being forced to scrap recruitment plans and stop investing in their own companies to pay rising fees from regulatory bodies.
Earlier this year hundreds of advisers who sold Keydata products received letters from FSCS lawyers Herbert Smith telling them to expect further claims. It is understood nearly 600 IFAs will be contacted in relation to advice on Keydata products.
According to the report, published today (5 July), during 2011-2012 FSCS recovered a total of £759m from the estates of failed firms, including £673m for the major bank failures and £30m relating to Keydata investment services.
It adds that 56 claims were outstanding at the end of 2011-2012, although new claims continue to drip in.
The FSCS paid out £347m in compensation to more than 86,000 claimants in the year. FSCS received almost 97,000 new claims during the year representing an increase of 145 per cent on the number of claims received in 2010-2011.
Payment Protection Insurance made up 84 per cent of new claims. A large volume of these were connected to Welcome Finance Ltd.
FSCS says it is responsible for the payment of Welcome claims, it adds that but an “innovative restructuring arrangement” means that the cost of compensating claimants and processing claims is met by Welcome.
This arrangement has so far saved the industry over £40m in compensation costs, the scheme claims.