FSCS pledges levy 'refund 'on N&P Keydata payout

The FSCS has pledged to use the money it receives from the £57m Keydata compensation deal it struck with N&P to partly refund advisers' levies.

A spokesperson says it has reached an agreement "in principle" with N&P for the building society to return to the scheme the amounts it has already paid out to investors.

However the FSCS says it is "too early to say" how much may be returned to advisers, or when.

"If the money comes to us it will be used to reduce the levy", says Suzette Brown of the FSCS.

Levy payers have only had money returned in one case previously. In 2006 the FSCS returned £42m to insurance firms after recovering more redress than expected following an initial levy.

Advisers paid out £93m in February in an interim levy primarily to cover the cost of compensating investors after Keydata's collapse in 2009. In total, firms in the FSCS's investment intermediation sub-class were billed a record £326m.

Investors who receive compensation from the industry-paid-for scheme sign their rights to the failed investment over to the FSCS in exchange for redress.

The FSCS says it then pursues recoveries wherever possible, and where successful it passes the money back to levy payers.

The scheme says the deal with N&P is seperate and in addition to any amount the building society paid out in an interim levy.