18th February 2015
The Financial Services Compensation Scheme (FSCS) today confirms it has secured more than £122m in recoveries relating to the failure of Keydata Investment Services. After deducting costs the current tally is £102m, according to the Scheme.
It publishes an account of the costs and recoveries to date on its website. Of the total, £52m results from FSCS’s litigation against independent financial advisors.
FSCS Chief Executive, Mark Neale, says: “We have a duty to pursue recoveries where it is cost effective to do so. We take that duty very seriously. It benefits the industry by returning money to the firms that pay our levies. So I am happy to confirm that our work in this area delivers results. We have achieved £122m in recoveries so far. That figure dwarves the overall costs of achieving them. In fact it does so by a margin of more than five-to-one. That’s good news for the firms that pay for FSCS protection.”
The statement goes on to say that in its recoveries made against IFAs the Scheme took account of their ability to pay. It says FSCS did not pursue levels of claims simply to force firms to go bust. That approach, it says, would be unlikely to pass a cost-effectiveness test and lead to lower recoveries overall.
Keydata is the biggest investment failure the FSCS has had to deal with. It has paid £330m in compensation to consumers since the failure of the firm.
The Financial Services Compensation Scheme protects consumers when authorised firms go bust. It comes to the aid of thousands of people a year in the UK. It has paid more than £26bn in compensation since it was set up.