Regulation  

IFAs mount legal challenge on Keydata rulings by Fos

Dumfries-based Westscott Financial Services, Essex-based CBHC LLP and Manchester-based DTE Risk and Financial Management are seeking a stay of five rulings to prevent enforcement, depending on the result of the legal challenge by the FSCS to recoup compensation from advisers over the failed investment scheme.

The three firms will be represented by national law firm Bond Dickinson LLP, which is also representing other advisers affected by the litigation.

Legal sources close to the case said it will set a precedent for how Fos handles 32 other Keydata complaints before the litigation case is brought to court, which may not happen until the end of next year.

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In the accompanying statements to the claim form, seen by Financial Adviser, the judicial review is described as “unusual” in appealing against the “unwritten general policy” of Fos to refuse suspension of the complaints.

The document stated: “The risk posed by these products is currently the subject of litigation against more than 500 IFA firms in the commercial court.

“However Fos has seen fit to make its own assessment of risk, on general grounds, without exhibiting quantitative calculation, and make adverse findings against the claimants, including ordering substantial financial redress in each case.”

It added that even if the commercial court rules in favour of the IFAs, Fos has no powers to revisit a final decision. It stated: “The claimants will be substantially prejudiced by such an outcome, for their reputations will remain tarnished by the Fos findings, and their insurance premiums will remain higher than they would otherwise be.”

It is expected that a hearing before the full judicial review will take place early next year.

A spokesman for Fos confirmed that it had received notice of the judicial review but would make no further comment for legal reasons.

Meanwhile, a West Sussex-based adviser has complained to Fos after Prudential refused to provide a terminal bonus value on a 65-year old client’s pension policy.

Ian Williams, managing director of Ridgeford Consultants, claimed the client, who suffers from ill health, had been deprived of the open market option and that Prudential’s conduct was not in the spirit of treating customers fairly.

Right to reply

A spokesman for Prudential said: “We believe that we have dealt with this matter in an appropriate way. We have looked in to it in detail and have responded accordingly.”