Couple caught in both Keydata and Park Row scandals

An elderly couple say they would be ‘very wary’ of using an IFA again, after finding themselves caught up in both the Keydata and Park Row debacles.

The husband and wife, both in their 60s, have £112,000 of their retirement funds tied up in Keydata. However, they have been unable to query their Park Row adviser about it because he has been awaiting FSA re-authorisation ever since the national IFA’s collapse ten months ago.

They have launched a mis-selling claim against the Royal Liver-owned company, which they blame for the advice they received, and say the scandal has ‘made a mess’ of their retirement plans.

“We are looking for another IFA, but we feel very wary,” say the couple, who have asked to remain anonymous.

“It is a complete and utter scandal. That is a decade of savings and putting money into ISAs. Now, I think we should have blown it all on flash holidays. We have no reward for being prudent.”

Their IFA, Adrian Owen, is one of many former Park Row advisers who have been unable to give advice in the ten months since the firm’s bankruptcy.

The couple say they have resorted to using the Internet to keep abreast of developments and assess their options.

“When we started reading on the Keydata victims’ website, we were horrified by what we had invested in. [Keydata administrator] PricewaterhouseCoopers is hopeless and Park Row has been singularly useless.”

According to the couple, Park Row failed to ensure that Owen understood Keydata products, and as a result, they were never made aware of the risks they faced.

Owen, who is so ‘disillusioned’ with the industry that he has withdrawn his FSA application to be re-authorised, says Keydata was introduced to Park Row advisers as a strategic partner, so he felt ‘secure’ advising on its products.

“Park Row invited Keydata to give presentations along with big names like Standard Life and Scottish Widows,” he says. “It endorsed Keydata.”

According to the financial planning report, which has been seen by Professional Adviser, Owen recommended a Keydata Stocks & Shares Maxi ISA and PEP Transfer to the couple in 2006.

The sole risk, they were told, was that: “inflation may erode the purchasing power of your lump sum”.

The report states that it should be read alongside Keydata’s Key Features document, but earlier this month, Professional Adviser revealed that brochures for the Secure Income Bonds (SIBs), contained ‘misleading’ and ‘inaccurate’ claims and failed to meet FSA requirements as early as November 2005.

Owen sold the couple seven-year SIBs and Secure Income Plans (SIPs) to plug their income gap when the husband took early retirement. Each moved £11,000 into SIP1, and the wife £44,000 and her husband £46,000 into SIP5. Both were backed by Luxembourg-based investment firm Lifemark.

The couple say they have not had a full financial review with their IFA in three years, although correspondence shows he notified them in June 2009 Keydata had been put into administration.

Owen was forced to contact them on 15 November 2009 to say he could no longer advise them, because Park Row had also entered administration and the FSA had revoked its advisers’ permissions.

Three days later, the FSA went to the Luxembourg court to have KPMG appointed provisional administrator of Lifemark, on the grounds that it was suffering short-term liquidity problems and was in urgent need of financial restructuring to stave off liquidation.

Like other Lifemark investors, the couple have received no income payments from their plans since February this year, after Lifemark announced it is using the cash to pay premiums on existing life policies, in order to preserve their value and avoid the fund defaulting.

The couple’s investment plans fall under the FSCS’s Category Three claims, and the scheme will decide next month whether it believes Keydata is legally liable for investor losses in Categories Two, Three and Five funds and whether it can pay compensation.

They are now searching for another IFA, but say their experiences have left them “very wary”.

Regulatory Legal’s Michael Cotter, a lawyer dealing with Keydata cases, says: “With a mixture of Park Row and Lifemark, you have a double whammy. I would expect the client to be able to approach the FSCS via Park Row, if a global settlement is not made with Lifemark investors by the FSCS.”