The Treasury has denied rumours it will step in to help victims of the Keydata debacle, saying it is an "FSA and FSCS" issue.
A posting on the Keydata Victims Action Group site yesterday claimed the Treasury were considering involvement in the case, as the FSA failed to warn investors about "materially false claims" in Keydata's literature, despite being flagged on the issue as early as 2005.
However a spokesman for the Treasury says it has no plans to pick up the lead from the FSA: "There is a structure and a process in place for dealing with Keydata.
"The Treasury is taking a very arms length approach."
The case for Treasury involvement centres on letters sent by senior executives of HSBC and KPMG to the regulator warning of discrepancies in investor documentation, less than a month after the launch of the Keydata Secure Income Bond in September 2005.
However, it was not until 18 December 2007, two years later, that the regulator began an investigation into Keydata's marketing materials, product diligence, and the adequacy of its systems and controls.
Peter Magowan, a private investor in Keydata products, says: "The dots were there to be joined up in 2005.
"Do we have any confidence in the moniker ‘authorised and regulated by the FSA'? No. The Treasury should step in and make investors whole."
He believes the FSA should repeat the public acceptance of responsibility it made in March 2008 over the collapse of Northern Rock.
"Investors would like someone in the FSA to hold up their hands, as they did with Northern Rock, and say the supervisory standard on Keydata was not acceptable."
"I'm sure there are many bright and talented people working at the FSA but I haven't seen any of them working on Keydata. It has been a one-way street with them on this one. The regulation system has failed us."
The FSA declined to comment on the Treasury's involvement in the case.
Two global vehicles
'Further plug advice gap'
Must appoint separate CEOs and boards
Advisers do come out well
Will report to Mark Till