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The Financial Services Authority (FSA) has today announced that it has fined N&P £1.4 million for failing to take reasonable care to ensure the suitability of its advice regarding sales of certain structured investment products provided by Keydata Investment Services Limited (Keydata). The products in question were backed by investments in bonds issued by SLS Capital SA (SLS) and Lifemark SA (Lifemark).
The FSA’s decision is the result of a recent investigation, which follows the administration in 2009 of Keydata and cessation of payments by SLS and Lifemark. Some 3,200 N&P members had invested in Keydata products, following advice from N&P’s then Financial Advice Service.
N&P has worked in an open and co‐operative way with the FSA before and during the investigation through to the settlement of this matter. It has also, together with the FSA, maintained a full dialogue with the Financial Ombudsman Service (FOS) regarding the ex gratia payments for its Keydata investors.
Gordon Horsfield, Chairman of N&P said: “The Society is committed to its members and has been deeply concerned for those customers who bought these products and who lost out following Keydata’s administration in 2009. Our aim in making ex gratia payments is to put that right and we are very sorry for the hardship and anxiety that they have suffered.”
N&P announced on 22 March 2011 that it would voluntarily make ex gratia payments to all customers who purchased Keydata products through N&P, in return for transfer of the investors’ rights in and relating to the investments. The basis of calculation of the payments has been agreed with the FSA and Financial Services Compensation Scheme (FSCS). This calculation is based on a FOS formula, but without the £100,000 cap applied to FOS awards.
N&P has worked extensively for many months with members of the regulatory community and others to resolve this matter in the interests of its members and customers.
Uniquely among IFAs, in June 2010, N&P made available interest free loans to customers in income difficulties following suspension of income payments by Keydata.
Additionally, in October 2010, N&P made a loan (since repaid) to the provisional administrator of Lifemark to seek to help him preserve any recoverable value in the underlying portfolio of life insurance policy assets. On 22 March 2011, N&P announced results demonstrating a performing underlying business, despite an exceptional non-recurring provision of £57m in relation to its advice to customers who bought Keydata investments.
During 2010, N&P also ceased providing financial advice as an independent financial adviser and has now concluded negotiations to act as an introducer to an independent third party, Aviva. N&P has also agreed with the FSA to commission a third‐party review of advised sales of non-Keydata products.
Notes to Editors:
Norwich & Peterborough Building Society and N&P are trading names of Yorkshire Building Society. Yorkshire Building Society is a member of the Building Societies Association and is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Yorkshire Building Society is entered in the Financial Services Register and its registration number is 106085. Principal office of Yorkshire Building Society: Yorkshire House, Yorkshire Drive, Bradford, BD5 8LJ
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