N&P told to reimburse Keydata couple
AN ELDERLY couple from Suffolk have become the first clients to succeed with a mis-selling claim against the Norwich & Peterborough Building Society after being advised by its staff to place money with collapsed investment firm Keydata.
The provisional ruling by the Financial Ombudsman Service (FOS) could, if confirmed, open the way for thousands of other Norwich & Peterborough (N&P) customers to bring similar claims.
Keydata went into administration last year, putting at risk around �450million invested by about 30,000 customers, including 3,500 who were sold policies from the company by N&P.
Although N&P has denied liability for its customers’ losses, the FOS has ruled that the unnamed couple from Suffolk, who invested a total of �28,000 in four Keydata policies in 2007, were exposed to “inappropriate risk”.
In its provisional decision, which is still open to an appeal by the N&P, the FOS said it did not believe the couple would have invested in the product, which involved second-hand life insurance policies from the United States, had they been fully aware of the risks.
The decision recommends N&P to replay the couple’s �28,000 in full, plus interest. Alison Rolls, spokeswoman for N&P, said the society was currently considering the ruling.
“We are working with the Financial Services Authority (FSA), the Financial Ombudsman Service and the Financial Services Compensation Scheme (FSCS) to ensure complaints are all dealt with in a co-ordinated way, so that a solution can be found for everybody, as soon as possible,” she added.
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Gareth Fatchett, partner at Regulatory Legal, which is representing about 200 N&P customers, said the couple’s case appeared similar to that of most people people caught up in the Keydata collapse and could open the way to more successful cases.
He added: “The adjudication is emphatic and we cannot see it being overturned on appeal. Our client group will be lodging their claim for redress on the same basis in early September.”
The FSCS is due to announce its decision over if and how Keydata customers will be compensated next month. If awarded, compensation would come from the public purse but the FSCS could seek to reclaim the money from firms such as N&P if it thought there was sufficient evidence of mis-selling.
