The Financial Services Compensation Scheme will get its day in court over adviser sales of Keydata bonds, after the compensation scheme confirmed it has established a new group of 15 lead defendants.
In a statement to FTAdviser the scheme confirmed there are 63 defendant firms in total, of which 15 will be used as lead cases.
An FSCS spokesperson added that “a shared cost order has been granted relating to all of them”.
She said: “Of the 63, 15 will be used as lead cases. The case is now set to proceed towards trial but no date has been set.”
In 2011, the FSCS sent a letter to financial advisers setting out their intention to recover payments from IFAs, claiming that the advice to clients was negligent and as a consequence the IFA firms should repay the FSCS.
Sent by solicitors Herbert Smith, the letter says: “We and the FSCS are still investigating this matter but our strong preliminary view is that good claims exist against a large number of IFAs including you.”
In May, Chase de Vere, the last of six lead firms which were set to defend the case, reached a settlement with the FSCS regarding client recommendations to invest in Keydata.
Following this, it was thought the FSCS may drop cases against financial advisers, however in the FSCS’s April newsletter it was revealed £7.2m has been set aside in 2014 to 2015 to cover the costs of recovery in relation to Keydata.
This is close to double the £3.8m spent in the most recent financial year, when the scheme underspent on an originally budgeted £7.2m due to the legal action being delayed.
FSCS stated in the newsletter that expenses “have been less than budgeted due to lower than anticipated activity in the on-going litigation”, but that this is “planned to increase to the previous year’s levels as the cases get closer to trial”.
donia.o’loughlin@ft.com
