Keydata savers call on MPs to help them win compensation

By RICHARD DYSON
Updated: 18:43 EST, 27 March 2010

Keydata investors whose bonds may be worthless, and who have been told that they will not win redress from the Financial Services Compensation Scheme, are asking their MPs to press for compensation.

A minority of savers with the failed firm are learning only now that they do not qualify for help from the scheme.

Those affected are investors whose plans are not set up as Isas and where the underlying assets were managed by Luxembourg firm SLS.

Keydata victims have written to MPs including speaker John Bercow

They are being rejected by the FSCS for technical, legal reasons, while investors in equivalent plans held inside Isas are receiving compensation. This discrepancy has caused outrage.

Investors are rallying together on website forums and through their financial advisers to try to pressure the Government to step in.

Letters have been sent to at least 20 MPs in the past week. High-profile recipients include Speaker John Bercow, Shadow Defence Secretary Liam Fox and Liberal Democrat Health spokesman Norman Lamb.

The hope is that questions from these MPs, directed at both the Treasury and the Financial Services Authority, could result in the FSCS 'changing its mind'.

The FSA will not comment on its investigation, which is ongoing, and in which it is liaising with Keydata's administrator Pricewaterhouse-Coopers and the Serious Fraud Office.

But it is possible that if sufficient new evidence comes to light to show that Keydata wronged investors, for example through misleading claims printed in its marketing material, then the FSCS could reconsider.

Norwich & Peterborough Building Society, one of the firms to sell the plans, last week sent the FSA copies of its files relating to the period when N&P was first checking Keydata's credibility as a provider.

If it emerges that Keydata was less than honest in response to N&P's questioning, investors' case for compensation might be assisted. Other advisers are expected to do likewise.

The FSCS, in the meantime, is insisting that it is treating applicants according to its rules and with ' complete consistency'.

This is disputed by some investors, however, who are compiling lists of rejected or accepted claimants and alleging that identical cases have not been treated similarly.

Patrick Connolly, of adviser AWD Chase de Vere in Bath, Somerset, which sold a great number of Keydata bonds, says: 'At the moment it is difficult to say whether or not the FSCS is being consistent.

'It appears to be following its rules. What we can say is that the whole system appears unfair with some people receiving compensation and others not.'

The FSCS says that of a total 4,700 applications in connection with Keydata it has made decisions on 3,360 cases. This includes Isa and non-Isa plans.