N&P admits Keydata compensation could hit £50m

The Norwich & Peterborough Building Society says that under a worst-case scenario it could face a £50m bill for covering the losses of clients it advised to invest in Keydata.

Matthew Bullock, the chief executive, said the firm is preparing for discussions with the FSA in September to decide whether it mis-sold products from the failed structured product provider, in an interview with BBC Radio Cambridgeshire this morning.

The Financial Ombudsman Service (FOS), which earlier this month issued a preliminary ruling that the firm pay out £28,000 to an elderly couple who it advised to invest in Keydata bonds, has agreed to discuss the firm’s appeal of the ruling after the FSA talks in September, he says.

Bullock said: “If you said that [the Keydata products] were 100% mis-sold and the bonds are worth absolutely nothing it could be about £50m.”

He said the firm carried out sufficient due diligence on Keydata and so should not be forced to cover investors’ losses. (article continues below)

However, the chief executive insisted that Norwich & Peterborough could cope with any compensation scenario. He said: “Even if it was 100% or nothing, there would be nothing that could be concerning our members or our savers about this because we have the reserves we could absorb even the worst-case scenario.”

Bullock added: “Certain things have happened in the last few days which make me feel reasonably confident that this thing will be resolved and people will be able to know where they are and hopefully feel good about things by the end of the year, probably by the end of September.”