APFA calls on FSCS to reach broad settlement in Keydata litigation
19 January 2015
The Association of Professional Financial Advisers (APFA) has called on the Financial Services Compensation Service (FSCS) to make positive steps towards reaching a broad settlement with the remaining defendants in the case relating to Keydata sales, which has run since November 2011.
15 firms have been identified as lead defendants, from the 63 remaining firms who have not yet reached a settlement with the FSCS. APFA has expressed concern that many of the remaining firms are small (a number with just one adviser) and unlikely to be able to carry the cost of court proceedings, risking the cost of compensation falling back onto the industry.
Chris Hannant, Director General at APFA, said:
“The FSCS has been struggling to identify lead cases, even with the threshold of claims lowered to £100,000. The FSCS should make every effort to contact the outstanding litigants and attempt to broker a settlement.
“The FSCS is at the point with this case where the larger defendants have already reached settlements, leaving only smaller firms as part of the action. Many of these firms don’t generate the turnover or the profits needed to carry the cost of a court case and the claims raised against them. It benefits no-one for firms to be put out of business by expensive court proceedings, as the cost then falls back on the industry rather than being recouped.
“It would be far better for the FSCS to be proportionate and reach workable settlements with the outstanding litigants, rather than create a situation where others are forced to pick up the bill.”
ENDS
