FSCS reveals £122m in Keydata recoveries at cost of £20m
The Financial Services Compensation Scheme has secured approximately £122m in recoveries relating to the failure of Keydata Investment Services so far, it has revealed.
The eight-page Keydata Recoveries Statement noted that the FSCS had recovered more than £122m from the Keydata default, although the work to recover this had cost £20.3m.
According to the FSCS document, it has recovered money through voluntary payments from Norwich and Peterborough Building Society, through work involved in the liquidation of Lifemark and through litigation against 820 IFAs.
More than £52.4m had been recovered from settlements achieved with these IFAs, and all but 10 claims against active IFAs had been resolved.
The recoveries statement said: “In pursuing its claims against the IFAs, FSCS has taken a commercial and pragmatic approach and sought to achieve settlements where appropriate and at the highest possible level.
“However, recoveries have been limited to some extent by the poor financial position of some IFAs.”
It added that some IFAs lacked responsive or adequate professional indemnity insurance in place to meet the FSCS claims.
The scheme has paid more than £26bn in compensation since it was set up.
Keydata designed and distributed structured products for retail investors. Between 26 July 2005 and 16 December 2005 it marketed SLS Plans to retail investors in the UK and abroad, and between January 2006 and 8 June 2009 it marketed Lifemark Plans.
On 8 June 2009 Keydata was put into administration by the high court following an application by the FSA, meaning it was deemed by FSCS to be in default and eligible investors were able to claim compensation.
So far, FSCS has accepted approximately 30,000 claims from investors in the plans, and has paid compensation of approximately £330m.
| Recoveries made by the FSCS pursuant to the Lifemark liquidation | £42.1m |
| Recoveries made pursuant to the IFA proceedings | £52.4m |
| Recoveries from Norwich and Peterborough | £28m |
| Total recoveries | £122.5m |
| Costs incurred by the FSCS in respect of the Lifemark liquidation | £4.5m |
| Costs incurred in respect of the IFA proceedings | £15.8m |
| Balance | £102.2m |
Source: FSCS as of 18 February 2015
Adviser view
Paul Holiday, financial adviser for Norfolk-based GreenSky Wealth, said: “This shows that FSCS does help to put faith back in the industry by providing some consumer protection.”
