N&P failed to explain Keydata risks in nine out of 10 cases

Data obtained by law firm Regulatory Legal has shown how Norwich & Peterborough Building Society (N&P) failed to explain to clients the risks associated with investing in Keydata policies in nine out of 10 cases.

The data, seen by Citywire, shows that in more than 90% of cases, N&P failed to explain the actuarial, liquidity, counterparty and capital loss risks linked with investing into Keydata, or the potential for the plan issuer to default.

Visit this gallery to see the Keydata survey results in chart form.

Regulatory Legal surveyed 207 N&P Keydata investors, and found that in two-thirds of cases, N&P failed to explain the effect commission would have on clients' investments, and in 88% of cases failed to explain longevity risk.

Almost nine in ten investors surveyed by Regulatory Legal were told to put all of their immediately available money into Keydata, and of the 207 cases an average had 34% of their total assets in the policies.

Only 7% of the investors in the sample considered themselves sophisticated investors with only 6% of the 207 clients prepared to put capital at risk. Three quarters invedt in the policies to supplement their pension income.

Regulatory Legal has alleged that N&P mis-sold Keydata policies, and is demanding compensation for the 250 clients of the building society it is acting for.

It plans to send the Financial Services Authority a dossier containing evidence it believes will prove that its clients were mis-sold the policies.

N&P advisers sold 3,100 Keydata bonds to older, cautious investors, netting £3 million in commission. In a number of the cases, the advisers invested all or a large proportion of investors money in Keydata.

The building society has defended the standard of advice given to its clients, despite the Financial Ombudsman Service awarding compensation to one couple who had been sold a Keydata policy.

N&P chief executive Matthew Bullock (pictured) has applied to the Financial Services Authority for waiver to temporarily suspend complaints about Keydata.

An N&P spokeswoman said N&P would review any complaint and promised to stand by its investors, adding that it had not been sent N&P's dossier and could not comment on its content.