Video: Nick Bamford on £93m FSCS levy

Wrong

Mr Bamford identifies the real problem with regard to compensation, that of a product provider being classified as an IFA, and then reaches the ridiculous conclusion that IFAs who advised on the products of this product provider should pay the bill! What sort of logic is that? I would like to ask Mr Bamford - did his firm warn all their clients who had more than £35,000 in deposit accounts that they could lose all their money in excess of £35,000? Would his firm stand that sort of scrutiny?

Posted by: Ken Durkin

who pays

Who did the crime should pay the fine, or in this case those who sold and profited from the keydata products, I totally agree with Nick and there needs to be a review on who pays, as this is a disincentive for good honest advisers to continue to trade, assuming they can still afford to, perhaps ifa's should give the fsa all there earnings in return for a wage, at the rate they are levying them they may be better off

Posted by: Geoffrey

mind over matter

It all comes down to attitude and mindset. Nic should follow Martins example, pay up and try to maintain a positive view.

Posted by: lol

Oops... poor ken

Sounds like Ken Durkin may have advised on a keydata product?, Nicks logic makes a lot of sense to me,as for deposits the limits would be in the deposit takers literature, sorry Ken its sounds like your heart is ruling your head with this one.

Posted by: Geoff

Agree

Yes, yes, yes, agree, agree, agree, however please stop regurgitating the issues and put forward a reasoned way forward. I said this in a previous blog and I'll say it this time - do we all stand together and refuse to pay it? If you do I will?

Posted by: Nick

I agree with Nick

I agree with Nick. If you ask any IFA that didn't use Key data they would probably tell you that having researched the company and the product it didn't stack up as being an investment they could recommend to their clients. When will IFAs realise that the word Guarantee means very little. If it is Guaranteed then yet more research needs to be carried out into who how the product is guaranteed what is guaranteed and then research the company or third party that is guaranteeing it. As a general rule of thumb we steer clear of structured products and this is evidence as to why.

Posted by: Paul Yallop

Trust

Research into the company Keydata? We need to be realistic. Which IFAs knew more about Keydata than the FSA? If the FSA found Keydata fit to trade then what information was available above and beyond what the FSA knew about them? If some IFAs do know more about product providers than the FSA shouldn't they, in the public interest, publish a list of FSA regulated companies that are likely to fail in the future? The only reason why anyone would have handed investment money to Keydata in the first place is purely and simply due to the fact that they were regulated by the FSA and covered (to some extent at least) by the FSCS. (It remains a mystery why anyone would have invested above the FSCS limits in such a company.) In the end the FSA found Keydata unfit to trade and quite rightly closed them down. To maintain trust in the system the FSCS should apply without question. What needs to be done is to get product providers to pay for the failure of product providers, and we need to be clear about what the difference is between IFAs and product providers.

Posted by: Ken Durkin

What are you lot talking about?

It is my understanding that Keydata provided investment for several years before what appears to be fraud took place. No doubt there hundreds of thousands of investors for whom the investments did as they claimed. How would any advisor be able to identify a fraud when presumably professional auditors didn't spot it is a huge ask. So, those advisors that recommended the product (not me gov, luck not judgement) would have done there due diligence on the investment, documentation etc, seen that it was FSA authorised, and entered into the investment in good faith. Now it appears that there were enough red flags at the FSA to cause concern yet as far as I know non of this was communicated to the IFA industry nor have they carried any liability. So, the issue is really down to the categorisation of Keydata as a distributer, sharing that classification with IFAs. I believe there is plenty of documentory evidence that suggests the FSA classed it as a Product Provider, how does it change when it comes to compensation, funny that! Now we have a problem, what if a larger product provider were to suffer a similar fate, how do we know how they would be classified by the FSCS if we cannot rely on FSA classifications. How is that the guilty can seemingly walk away with millions leaving the innocent to pick up the tab. Is it simply the easy options for the powers that be to send the bill to IFAs, don't they consider it treating the investing public unfairly by having the IFA community charging more to provide a slush fund for the next equitablekeydata debacle. It is simply unfair to expect that we can always absorb whatever the FSCS wants at any time with 30 days notice, no right to complain, no abitration, the only concession is to spread it with a loan! How can I be sure the next one won't be £6,000 or £10,000 or more. My business could not absorb it.

Posted by: Mark