FCA bans ex-Keydata compliance officer but rules out £200k fine

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The FCA has banned and publicly censured former Keydata compliance officer Peter Johnson for failing to act with integrity and misleading the FCA.

Johnson had lodged an appeal with the Upper Tribunal against the regulatory action, but has since withdrawn his appeal. Upper Tribunal cases will still be held in relation to former Keydata chief executive Stewart Ford and former sales director Mark Owen.

The regulator says it would have fined Johnson £200,000 were it not due to serious financial hardship.

The FCA found Johnson failed to act with integrity as he knew Keydata had received advice that its financial promotions were unclear and misleading, but failed to take steps to address this.

Keydata had also been advised its due diligence was inadequate, and the Lifemark and SLS portfolios, which underpinned Keydata’s investments into life settlement policies, was underperforming.

The FCA says Johnson failed to take the recommended steps to improve its processes, and failed to ensure risks were managed effectively.

Johnson was also found to have failed to communicate the risks to advisers who sold Keydata products.

The regulator says Johnson “deliberately misled” the FSA when he called in for regulatory interviews, saying there had never been a product in paying income on the Keydata investments. This was despite the fact Johnson was aware of severe liquidity risks within the portfolio.

In the final notice, the FCA says: “The authority considers that Mr Johnson’s failings in this regard are of the most serious nature in light of the significant level of consumer detriment which has arisen from the sales of the products and the impact which this level of consumer detriment has had on the financial services sector.”

The collapse of Keydata in June 2009 prompted a £326m Financial Services Compensation Scheme interim industry levy in 2011.

Between July 2005 and June 2009 over 37,000 investors paid over £475m into Keydata products. The FSCS has since paid out over £330m to Keydata investors.