Keydata income payments suspended

1 July 2009

PricewaterhouseCoopers (PwC) has suspended income payments and banned early redemptions on some of insolvent firm Keydata’s products.

The administrator has also been unable to sell the company, despite claiming it would be sold and "everything would go back to normal" by 19 June.

Keydata, a provider of structured products, went into administration on 8 June after the Financial Services Authority (FSA) slapped a £5 million fine on the company for selling non-compliant ISAs.

The FSA is now working with PwC and also the Serious Fraud Office to reach a solution for investors, and to uncover ‘potentially missing assets’.

The FSA has labelled the situation "complex" after PwC’s forensic examination of Keydata’s accounts revealed that income payments and early redemptions had been dealt with irregularly, and that assets may have been liquidated and misappropriated.

This all spells bad news for some Keydata investors. Secure Income 1, 2 and 3, and Income Property Bond 1-6 have had income payments and redemptions put on hold by PwC.

Investors in Secure Income Bond 4, Secure Income Plan 1-12 & 14 and Defined Income Plan 1-8, Special Editions and some Lifemark branded products (for a full list of affected Lifemark products, see the PwC website) will continue to receive income payments, but redemptions have been banned.

PwC is now looking to sell the business and is in talks with "interested parties".

Dan Schwarzmann, joint administrator and partner of PwC, says it is disappointing the business has not been sold yet as this would have provided some much needed stability for investors, employees and creditors.

He adds: "I reiterate my earlier confirmation regarding funds held by Keydata. The funds, which totalled £70 million at the date of our appointment, are all held in secure segregated client bank accounts and are not affected by the insolvency of KIS."

Concerned investors should visit the PwC website for up-to-date information, or call the helpline on 020 7804 4424.


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