Investor given no reason for rejected Keydata compensation bid

The Financial Services Compensation Scheme (FSCS) has refused to release evidence justifying why it rejected a claim from a consumer who bought a Keydata Secure Income bond.

The FSCS told Gareth Fatchett (pictured), partner at solicitors Regulatory Legal, it had no obligation to give information on why it would not compensate a client for money misappropriated from SLS Capital, which underpinned the Keydata bond.

FSCS head of legal James Darbyshire said there was no link between the disappearance of the £103 million and Keydata. Investors instead needed to prove they had relied on a fraudulent misrepresentation made by Keydata to claim compensation for non-ISA wrapped Secure Income bonds. Darbyshire dismissed Regulatory Legal’s attempt to launch a judicial review of its decision as an ‘unfocused fishing expedition’.

Darbyshire also rejected Fatchett’s application, which is the first step in a judicial review, because it was sent via email rather than through the post.

Fatchett has also applied for a judicial review of the £80 million FSCS interim levy, which was imposed on investment intermediaries in order to cover Keydata payouts. The FSCS has drawn fire for only paying compensation to consumers with ISA-wrapped secure income bonds because the product was not eligible for ISA status.