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Elderly couple awarded compensation over investment firm collapse

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The Financial Ombudsman Service (FOS) has told Norwich & Peterborough Building Society (N&P) that it must pay out £28,000 to an elderly couple who invested in now defunct Keydata products.

Keydata, which sold policies to roughly 3,500 customers through the N&P building society, went into administration last year and most of the £450m invested by 30,000 investors is now at risk.

Since its collapse, N&P have denied liability for any customer losses incurred but the FOS has ordered the company to reimburse two elderly clients, who were previously advised to plough £28,000 of their money into Keydata policies.

The FOS ruling says the N&P wrongly advised the couple to invest more than 40% of their savings in the investments – second-hand life insurance policies from the US – that were too risky for their circumstances.

“The fund’s underlying mixture of assets exposes [the clients’] capital to a greater degree of risk than they were likely to be willing to accept,” the FOS adjudicator said.

“Bearing in mind that they were both retired and there is no evidence of them investing before they met the advisers, it seems unlikely that they would have been willing to accept the risks inherent in the Keydata income plan fund, especially at this stage of their life.”

However, the ruling is still in its preliminary stages and N&P are expected to challenge the decision over the coming weeks.

Approximately 250 separate cases are to be logged with the FOS regarding N&P and Keydata’s demise in the near future.

Written by Andrew Hodges

August 24, 2010 at 9:03 pm

Posted in Comment, LinkedIn

Tagged with , , ,

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