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International law firm DAC Beachcroft LLP is encouraging IFAs facing compensation claims from the Financial Services Compensation Scheme (FSCS) in relation to Keydata investments to coordinate their responses and resources to defend these claims.
Last month, Herbert Smith, the law firm representing the FSCS, started to send letters to IFAs saying that the FSCS intended to recover from them the compensation costs which it had paid out to investors in Keydata. Late last week it followed up on that threat by serving legal proceedings on 500 plus IFAs to claw back the compensation it has paid out to more than 5000 investors in the SLS products.
“In addition to launching recovery actions in respect of the SLS product, the FSCS has made it clear that it is looking to make recoveries in relation to the Lifemark products and we know that in total it has paid compensation of £214 million in more than 27,000 Keydata cases, which it could try to recover from IFAs,” explains Dan Preddy, partner at DAC Beachcroft. “A number of IFAs have already approached us for advice about how to respond to these claims, or because they are concerned that they will inevitably be on the receiving end of legal proceedings in due course,” he said.
“The FSCS may be looking to agree early settlements with IFAs but there are major problems with its claim which we believe are best tackled by IFAs acting collectively. In reaching its decision to pay compensation to Keydata investors, the FSCS made determinations and concessions which are fundamentally inconsistent with the recovery claim it is now bringing against IFAs.
“The benefit of group action is that it will enable IFAs to develop crucial generic defences against these claims in relation to causation and foreseeability as well as the risk profile and suitability of the Keydata products, which they will be able to deploy more effectively as a group,” he said. “We believe that being part of a group in this way will give IFAs a significantly stronger platform for defending these claims than if they try to take on the FSCS on their own. Crucially, they will also be able to share the cost burden of developing and then deploying those defences,” he concluded.
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For further comment or to arrange an interview, please contact Jo Patteson, Insurance PR manager for DAC Beachcroft LLP on +44 (0)117 918 2187 or jpatteson@dacbeachcroft.com, or contact the DAC Beachcroft press office on pressoffice@dacbeachcroft.com
About DAC Beachcroft:
With over 2,000 people, DAC Beachcroft combines one of the most comprehensive UK legal networks with coverage across Europe, Latin America, North America and Asia-Pacific.
We provide a full service claims, transactional, commercial, risk and advisory capability. We work with clients in a select range of industry sectors and are market leaders in health, insurance and real estate.
We are agile, progressive and easy to engage with. Our flexible approach to resourcing enables us to apply the right mix of legal, commercial and process skills to deliver the right outcome at the right price, depending on our clients’ individual needs.
We are committed to supporting the communities where we operate through charitable giving, pro bono work and programmes such as those operated by Business in the Community and The Prince's Trust.
Chambers UK, A Client's Guide to the Legal Profession 2012, recognised 121 of our partners and professionals as leading lawyers and we hold 84 rankings in 34 separate practice areas, 20 of which are number one rankings.
DAC Beachcroft holds certification under ISO9001, the quality assurance standard and ISO27001, the information security standard and we are the largest law firm in the country to hold a silver Investors in People award.