AWD defends Keydata advice as it joins FSCS' lawyers hitlist

AWD Chase de Vere has defended its recommendations as "sound" after it became the latest IFA accused of giving negligent advice on Keydata products by lawyers acting for the Financial Services Compensation Scheme.

IFAonline revealed Law firm Herbert Smith has sent letters of claim to IFAs who invested clients in Keydata - customers who have now received compensation from the FSCS - saying the scheme will pursue the firms for recovery of the money.

AWD Chase de Vere confirmed it is one of the firms which has received a letter.

All advisers who recommended Keydata products to low or medium risk clients who later claimed compensation, face the threat of legal action and crippling repayments to the FSCS, according to letters sent to other IFAs seen by IFAonline .

Patrick Connolly, head of communications at AWD, said the letter the firm has received is the same, but defended AWD's Keydata advice.

"We have made no provision for any liability and we do not expect to make any provision. At this moment we are not doing anything.

"We think the advice in terms of selling Keydata products and products in general was sound," he said.

AWD has previously supplied client files to the FSA for review at the regulator's request.

Firms in the FSCS's investment intermediation sub-class were forced to pay an interim levy of £93m in January to cover the cost of claims against investment firms, including Keydata.

Including firms in the investment fund management sub-class, the total interim levy for 2010/11 hit £326m, made up of £7m management expenses and £319m compensation costs.

About £247m of the costs are for claims against Keydata.

The FSCS has recouped £28m from Norwich & Peterborough (N&P) after the building society admitted it mis-sold investors Keydata products.

In April the FSA fined N&P £1.4m for mis-selling Keydata investments, and the building society has had to payout approximately £51m in redress to customers.