Keydata levy clouds bright PosSol start

Positive Solutions has been forced to pay out more than £1m to cover compensation costs relating to a number of investment failures last year.

The Aegon-owned company's share of the £80m FSCS charge to bail out customers of Keydata and two stockbrokers has been described as "significant" by CEO Jim Reeve.

In an update to partners, Reeve says: "The impact on ourselves is significant with us having to absorb an additional cost over £1m. In my opinion, this levy is simply unjustified."

The charge will impact on what Reeve says has been an "exceptional" start to 2010, with turnover up by 12% to £22.3m.

He says business turnover increased by 21% in March alone, driven by an "extremely successful" tax year-end ISA campaign.

Earlier this year, parent company Aegon announced combined losses for Positive Solutions and Origen hit £16m last year, down from a £1m loss in 2008, as the distribution businesses were hit hard by the economic downturn.

The insurer did not break the results down for each company, but Positive Solutions is understood to be in a strong cash position and has no debt.

The controversial FSCS interim levy is broken down into £58m to compensate clients from Keydata, Pacific Continental Securities and Square Mile Securities with another £22m relating to Lehman Brothers-backed structured products.

It will be imposed on investment intermediaries despite widespread opposition which argued Keydata, in particular, marketed itself as an investment manager, not an intermediary.