The Financial Services Compensation Scheme has chosen a team of six IFA firms as guinea pigs in a high-court showdown over Keydata.
The City regulator is believed to be talking to lawyers in preparation to use the firms as a test case in the court room battle.
It is understood that a list of six well-known names was leaked out in connection with the test case before the FSCS had the opportunity to contact them.
The firms involved – which are thought to include national advisory firm Positive Solutions and Cumbria-based InvestAcc – will now have the opportunity to object and make an application to court.
A spokesman from one firm, which wished to remain anonymous, said it was “surprised” to have seen media reports about the test case before being contacted by the FSCS. It has been advised by its solicitor, DWF Fishburns, to not comment on the case.
Chase de Vere was named as the first of six lead cases earlier this year following discussions at a case management conference in March. A spokesman said the firm had “volunteered” to be a defendant in the case but it would add no further comment.
Other firms that are said to be on the updated list of defendants are PQR Financial Planning, the On-Line Partnership and RW Harris. All declined or were unavailable to comment at the time of going to press.
A spokesperson for the FSCS said: “The lead case defendant selection process has not been completed and a final list has not yet been agreed – it is not appropriate for the FSCS to confirm any of the names proposed or considered.”
Herbert Smith Freehills, the lawyers representing the FSCS, said the scheme would be seeking to recoup at least £210m in total Keydata compensation from advisers at the case management conference.
Harry Katz, principal of Middlesex-based IFA Norwest Consultants, said: “I wonder how they have selected these firms. I have a suspicion that they have tried to select the low-hanging fruit.
“But there is a great disparity between many of the firms involved and the different types of advice offered. There were those advisers that sold these investments like sweeties. There are those of us that did make an effort, whose clients didn’t invest more than 10 to 15 per cent and who did not invest in Isas.
“But this will be a total stitch-up – there is no way that the FSCS will lose this case.”
