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Topics: Norwich and Peterborough| Keydata
Norwich & Peterborough's (N&P) chief executive says its customers lost money in Keydata because of fraud, not mis-selling, and he has passed the buck for compensation to the FSA and FSCS.
Matthew Bullock told BBC Radio Cambridgeshire yesterday he has no regrets about selling Keydata investment products through N&P branches, despite writing to customers as early as 2006 with concerns about the clarity of the provider's marketing material.
He also played down a recent Financial Ombudsman ruling ordering N&P to pay £28,000 compensation to a couple for mis-selling Keydata products, adding the FSA and not the FOS was in charge of the case: "The whole orchestration of the discussion of these cases is in fact being run by the FSA, not the Financial Ombudsman."
He said he would prefer the FSCS to find Keydata collapsed due to fraud to avoid N&P having to sort customers into "sheep and goats" over who received poor advice.
"We will need to sort sheep and goats, and I would rather the FSCS stepped in than us try and sort out who we think we have mis-sold to."
Bullock said he would find it "puzzling" if the FSA and the FSCS failed to rule investors lost money because of internal fraud.
"What has happened here is that it has either been fraudulently or totally mismanaged by Keydata and that is a piece of work which the Serious Fraud Office is investigating.
"Our analysis of the product was that it is a very stable product," he said.
Keydata investors had this week welcomed the first preliminary ruling by the Financial Ombudsman Service (FOS) in favour of an elderly couple who were advised by an N&P IFA to invest in the failed investment vehicle.
N&P was ordered to pay £28,000 in redress, plus interest. However, the building society said it will appeal the decision, citing assurance from the FSA it will be granted a waiver to allow it to put claims on hold until the regulator decides on the issue in September.
Read the full transcript of the interview here.
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| Comment | N&P CEO passes Keydata compensation buck to FSA |
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Quite right
From the FSA Web Site… “The FSA regulates the financial services industry and has five objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; securing the appropriate degree of protection for consumers; fighting financial crime; and contributing to the protection and enhancement of the stability of the UK financial system.” Comment. Market confidence is low. Public understanding of the financial system is pitiful and resonates with the FSA’s own apparent lack of understanding of the financial system. Securing the appropriate degree of protection for consumers. Please! Fighting financial crime. In most peoples eyes the payment of FSA bonuses is a crime waiting closer scrutiny. Contributing to the protection and enhancement of the stability of the UK financial system.” Roughly translates to reactive overkill in mitigating former failures. Thank you FSA.
Posted by: Hoping for change
Product Analysis
Our analysis differed: As published at the time: Secure Income Bonds: http://www.lowes.co.uk/StockmarketBondsDetails.aspx?ID=387 Secure Income Plans http://www.lowes.co.uk/StockmarketBondsDetails.aspx?ID=471 "risks are unquantifiable"
Posted by: Ian Lowes
Main Risk
The main risk was the invention of a cure for death. There were plenty of companies involved and most were A credit rated. With this product good news was bad news and bad news was good news. Our reseach involved checking the history of US mortality rates. We stopped advising on Keydata products at the time we learned of an Inland Revenue investigation into one of their products in the summer of 2007. No smoke without fire.
Posted by: Ken Durkin
Stable?
As in horse = bolted? Stable? As in Lehmans? The banking system? The Economy? The regulatory system? I don't know who carried out their analysis but suggest they ask for a second opinion. As far as "sheep and goats" are concerned I wonder if that is insulting clients (or is it punters?). Is this treating customers fairly? I would agree with Ian Lowes, the risks associated with these products are unquantifiable, but that applies to almost all investments, that means NOTHING is guaranteed which is what the compensation machine implies.
Posted by: Evan Owen
Unquantifiable?
In light of what has happened in recent years show me an investment risk that is quantifiable.
Posted by: Ken Durkin
What is an IFA?
Is there such a thing as an N&P IFA? I would have thought the two were mutually exclusive! The incorrect use of terminolgy is exactly what has led to the FSA actions on polarisation/RDR etc. If the industry publications can't get it right, then god help us!
Posted by: Chris Burden
N & P
Or any other "IFA" that has to work to targeted sales list. Is an oxymoron.
Posted by: John whipple
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Keydata past/present
I'm not a Keydata investor/victim or IFA but an interesting comment from Mr Bullock "Our analysis of the product was that it is a very stable product", is this a mix of past and present tense or is it still a stable product?
Posted by: Barry