Keydata Investment Services Limited
Claims involving Keydata Investment Services Limited: SLS and Lifemark
Keydata was declared insolvent and put into administration by the Financial Services Authority in June 2009. Financial advisors who recommended Keydata to their clients may now face claims for compensation. Across the UK nearly 30,000 investors had deposited a total of £450m in Keydata.
Keydata was often recommended by financial advisors to their clients seeking a low risk investment on the basis that it provided protection from the volatility of the stock market, offered capital protection and provided a higher level of return than alternative deposit products. Keydata investments had also been wrongly classified as having ISA status which produced a tax bill it was simply unable to meet.
In fact Keydata investments were complex products involving non-FSA registered, non-UK based entities which relied entirely upon both the currency markets and the existence of a trading market in life assurance policies. A fall in either would have left investors unable to access their funds with no guarantee whatsoever that the capital invested would itself be recovered with the return promised or indeed at all. This was a high risk financial strategy and one unsuitable for most investors, particularly those seeking low risk investments.
Accordingly many investors are now seeking compensation from their financial advisors. Whilst such claims would usually be covered by an advisors professional indemnity insurance policy, some insurers are refusing to meet claims arising from the insolvency of an institution. This may adversely impact on both the investor and the advisor if not challenged by both. Where insurance is in place for these claims our team is committed to considering “no win no fee” conditional fee agreements under Pannone’s Advantage funding product.
Our team also has experience of, and is able to assist with, an application for compensation to the Financial Services Compensation Scheme (“FSCS”).
Keydata investments were based on packages of “second-hand” life assurance policies bought from elderly US citizens and provided largely by two Luxembourg based companies known as Lifemark and SLS Capital SA.
SLS Investments
SLS has since been declared insolvent and in July 2009 PricewaterhouseCoopers announced that the £103m invested with SLS by Keydata depositors had been misappropriated and the UK’s Serious Fraud Office was called in. The FSCS paid out compensation to investors amounting to £42m. However a shortfall of approximately £60m invested remains unrecovered.
Lifemark Investments
Lifemark was placed into provisional administration by a Luxembourg court in February 2010 and by March all income paid to Keydata from the underlying life policies ceased and investors were no longer permitted to cash in their investments. Various rescue proposals are currently being considered by the administrators of Lifemark and it is hoped that a restructuring deal can be found to prevent the underlying life policies lapsing.
Financial Services Compensation Scheme
The FSCS has invited applications for compensation for some, but not all, of the different types of investments in Keydata. The wider compensation picture remains unclear, complicated by the fact that both SLS and Lifemark were not FSA registered and that the fate of Lifemark is yet to be decided.
FSCS compensation is limited to £48,000 per investor which in most cases does not adequately compensate the investor and in such cases redress may be sought from the advisor.
Our team will be able to advise and assist in the completion of the FSCS compensation forms which, if completed incorrectly, may prevent any outstanding losses being recovered from their financial advisors.
Claims involving Keydata Investment Services Limited: SLS and Lifemark
To discuss your claim in more detail at no initial cost please contact Julia Norris on 0800 840 4929 or email julia.norris@pannone.co.uk.