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Topics: Norwich and Peterborough| Keydata
The Financial Ombudsman (FOS) has told an investor who alleges Norwich & Peterborough (N&P) mis-sold him a Keydata investment to seek compensation from the industry-funded FSCS instead.
Its recommendation was made even though the investor denies Keydata brochures are the cause of his loss and insists mis-selling by N&P advisers was to blame.
This means he can only apply for redress through the FSCS, funded by the industry including advisers, rather than the FOS which forces the individual firm at fault to pay.
The father of two invested £20,000 on behalf of each of his young sons and says he has been pursuing the FOS route rather than the FSCS as he genuinely believes N&P mis-sold him his investment.
"The letter is a blow in the teeth to all those IFAs who had nothing to do with selling Keydata products but have had to face extra levies to make up the FSCS shortfall," he says.
"They should be screaming blue murder at N&P for apparently getting off (almost) Scot free for what has been called their "systematic mis-selling".
In the letter, the FOS adjudicator says: "Whilst I have read your comments, I would have to advise you that the FSCS is accepting Keydata complaints and therefore I believe the matter would be more properly resolved for you via this route.
"I would add that while the FOS is happy to consider the merits of your complaint, the final resolution would likely to be no/much [sic.] different to that on offer from the FSCS, i.e. a return of the investment made.
"I would add that we would not look to review or critique the business' [sic] advisers or training.
"Under the circumstances, you may wish to consider this option and make an application to the FSCS."
However, the investor says the FOS have avoided the central issue of his complaint.
"My complaint was not against Keydata for misrepresentation, it was against N&P for mis-selling. It also sidesteps the fact that N&P failed even to consider my complaint.
"So I have to take issue with the first paragraph. I reckon the matter would more properly be resolved by N&P, and since they won't resolve it, by the FOS."
Firms in the FSCS's investment intermediation sub-class have already been forced to fork out a record interim levy of £326m this year, mainly to cover the compensation costs of investment firm Keydata's collapse.
Investment advisers were hit for £93m of the total, with many forced to hike their client charges to pay the levy.
In November, the FSCS announced it would only consider 'eligible' claims from investors who relied on Keydata marketing brochures, as they did not comply with the FSA's rules.
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| Comment | FOS tells N&P Keydata victim ‘go to FSCS' |
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Flawed process
The advice given by the N&P staff member may have been correct, or it may have been incorrect. This Ombudsman's decision, or lack of as they have declined to give a decision based on this article (I suspect just an adjudicator not an Ombudsman) may be trying to do the client a favour here as if the process of the individual sale is decided to be correct advice, then the FOS would not instruct N&P to pay out and the client would then have to resort to the FSCS anyway. The problem now is the client has said they did not rely on the brochure at all and hence they cannot claim to have done so in hindsight can they. If they had relied a bit on both the advice and the brochure, that is another matter. If this case goes to the FSCS, under their rules, becuase they client believe the adviser (N&P) was at fault, they should bounce it straight back to the FOS to actually make a decision. Looking forward to Matin Bamford's comments on this one, he'll be livid.....
Posted by: Nameless
Outcome may be the same but not who pays
The FOS should have considered the complaint regardless if the outcome would have been the same at the FSCS. If the FOS is an "ombudsman" service is should do what it is paid to do. It is not acceptable to simply pass the case to the FSCS just because the compensation paid may be the same, it is not paid from the same source and if we continue to take the route of everyone pays for others mistakes while the culprits face little penalties for their own failures then we will not stop these failures continuing. Seems FOS has taken the easy way out and one has to question what we are paying them for in such a service.
Posted by: Michael Fallas
Outcome may be the same but not who pays
The FOS should have considered the complaint regardless if the outcome would have been the same at the FSCS. If the FOS is an "ombudsman" service is should do what it is paid to do. It is not acceptable to simply pass the case to the FSCS just because the compensation paid may be the same, it is not paid from the same source and if we continue to take the route of everyone pays for others mistakes while the culprits face little penalties for their own failures then we will not stop these failures continuing. Seems FOS has taken the easy way out and one has to question what we are paying them for in such a service.
Posted by: Michael Fallas
What do we know?
In the opinion of the FOS the products were not missold it would seem. Just because a company goes bust it does not mean the product was missold. What we do know however it that Keydata was a product provider and product providers should be funding the FSCS to cover money lost by investors within the FSCS limits.
Posted by: Ken Durkin
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why should we pay for N & P
I am becoming a greater believer in the conspiracy theory ! This appeard to be a clear complaint against a busines - THAT IS STILL IN BUSINESS. But FOS are apparently trying to dump it onto the FSCS which there is to compensate for firms that are no longer around - for whatever reason But it is much easier to dump it onto FSCS and thence IFA's than to adjudicate and perhaps find against N & P. Maybe becasue N & P have more lobbying power and strength to argue with FOS than we have.
Posted by: alastair lyon