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Keydata debacle sparks 500% FSCS claims jump
22 July 2010
The Financial Services Compensation Scheme (FSCS) received almost 20,000 extra investment claims in 2009/10, mostly as a result of the collapse of Keydata Investment Services. In its annual report, published today, the scheme reveals it received 24,301 claims for the investment intermediation sub-class in the last financial year, compared to 4,170 in 2008/9, an increase of 483%. Most relate to the collapse of Keydata Investment Services, Pacific Continental Securities and Square Mile Securities. It says it has resolved a total of almost 15,200, paying compensation in each case. The FSCS says Keydata generated several different types of claims last year, adding a number of "complicated legal issues" are still to be resolved. It dealt with two main categories of claims relating to Keydata: funds backed by SLS Capital and funds backed by Lifemark SA (confirmed as being non-ISA eligible). It says 91% of 3,595 completed claims resulted in an offer of compensation in the SLS Capital category, with an average payout of £9,800. For Lifemark, 86% of almost 3,200 claims resulted in an offer of compensation, meaning the FSCS will meet the tax liability when it arises. It says it is continuing to look into whether it will be able to compensate investors for other categories of claims. The scheme's controversial £58m interim levy on the investment intermediation sub-class following the collapse of Keydata is subject to judicial review, pencilled in for later this year. Advisers say Keydata was marketed as a provider and should have been classified as such. Overall, the FSCS paid more than £204m in compensation to over 21,000 claimants in 2009/10. Claims relating to Payment Protection Insurance (PPI) continued to rise, accounting for 2,400 individual queries last year. Published by IFAonline
