Norwich & Peterborough Building Society will today receive letters from solicitors acting on behalf of 250 customers, demanding compensation for investment advice they received relating to Keydata plans.
At the same time, a dossier containing evidence of what is alleged to be N&P's repeated mis-selling of investments between 2006 and 2009 will go to the FSA, reports the Financial Mail.
Advisers at N&P sold 3,100 Keydata bonds to mainly older, risk-averse savers, collecting £3m in commission.
But in a high proportion of cases, advisers told customers to put most or all of their money into the bonds. They also failed to spell out risks or disclose their commissions.
Law firm Regulatory Legal already represents 250 N&P Keydata investors but expects a further 300 to sign up soon.
It has used data laws to force N&P to hand over the documents relating to each bond sale, disclosing the notes made by its advisers during the sale process.
In 180 out of 207 cases Regulatory Legal has analysed so far, nearly nine in ten customers were advised to put all of their immediately available savings into a Keydata bond.
Regulatory Legal has also found the 207 cases had on average 34% of their total assets in Keydata. Around 41 cases had more than half their life savings in Keydata.
About 98% of the savers said the risk of concentrating on one investment was not discussed during the sale while 90% said counterparty risk was also not mentioned.
Hundreds of savers have complained direct but have been put off by N&P, which claims it cannot respond until the FSCS clarifies its position on Keydata and related
Regulatory Legal's Gareth Fatchett says this is not good enough: "These investors' complaints don't relate to the solvency or otherwise of Keydata.
"These are complaints about N&P's advice, which has exposed customers to excessive risk by putting huge proportions of their assets into a single, sophisticated investment."
Fatchett is holding a meeting in Norwich today to answer questions from investors.
Regulatory Legal is operating on a no-win, no-fee basis but it will take 10% of any compensation won for consumers.
N&P customers interested in attending the meeting or joining the action can find out more at: www.keydatainvestorsgroup.co.uk.
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