Judge Justice Beatson told today’s High Court hearing that he is likely to deliver his verdict on the judicial review of the Financial Services Compensation Scheme (FSCS) Keydata levy in the next two weeks.
The court set aside two days for the hearing but proceedings ended today after one day in Birmingham High Court after both sides put their arguments across.
Anthony Speaight QC, acting for Regulatory Legal and a large number of IFAs, said Keydata was acting as an investment provider and therefore intermediaries should not have been charged levies to cover the full costs of Keydata compensation.
He said: “The critical questions, which are ultimately very short, although may not be easy, are was there a situation where Keydata was acting as an agent for customers, or is it a situation where it was safeguarding investments through its nominee companies?
“Or, which is our case, was it a situation where there was a significant exercise of discretion, where it might have been acting as an investment provider?” (article continues below)
The claim focuses around wording in Keydata’s brochures that suggests the company exercised discretion over when to purchase bonds to clients.
It was also claimed the FSCS failed to complete an adequate consultation before making its decision.
Charles Flynt QC, representing the FSCS, defended the judicial review suggesting that Keydata did not have any discretion over bond trading and pointed out that the bonds had to be held until maturity. He said: “Keydata had no discretion, they were not bonds to be traded they were bonds to be purchased.”
The FSCS says it did not need to consult over the decision to classify Keydata as an intermediary but Regulatory Legal claims that because some kind of consultation was entered into, due process should have been adhered to.