Apfa has called on the Financial Services Compensation Service to help remaining defendants in the Keydata sales case, director general Chris Hannant has said
He called on the FSCS to reach a broad settlement with the remaining defendants, saying: “The FSCS has been struggling to identify lead cases, even with the threshold of claims lowered to £100,000. The FSCS should make every effort to contact the outstanding litigants and attempt to broker a settlement.”
He said that the FSCS was at the point with this case, which has run since November 2011, where the larger defendants had already reached settlements, leaving only smaller firms as part of the action.
“Many of these firms do not generate the turnover or the profits needed to carry the cost of a court case and the claims raised against them,” he said. “It benefits no-one for firms to be put out of business by expensive court proceedings, as the cost then falls back on the industry rather than being recouped.”
To date 15 firms have been identified as lead defendants, from the 63 remaining firms who have not yet reached a settlement with the FSCS.
He said Apfa was concerned that many of the remaining firms were small, many with just one adviser, and unlikely to be able to carry the cost of court proceedings, risking the cost of compensation falling back onto the industry.
“It would be far better for the FSCS to be proportionate and reach workable settlements with the outstanding litigants, rather than create a situation where others are forced to pick up the bill”, Mr Hannant added.
