AWD Chase de Vere exposed a client to Keydata at more than twice the appropriate level considering his medium attitude to risk, the financial Ombudsman (FOS) has ruled.
An unnamed adviser with the national IFA invested almost half of a customer's open annuity in the failed investment firm, but the FOS recommended it should have been no more than 20% "in accordance with the principles of diversification".
IFAonline can also reveal AWD's in-house literature, made available to the client before the investment was made, recommended only "a small holding (circa 10%)" in the traded US life settlements asset class, in which Keydata resided.
The FOS recommends AWD pays the client as much as necessary to give their investment the transfer value it would have had if no more than 20% had been with Keydata, which was placed in administration in June last year.
AWD says it is challenging the Ombudsman's recommendation.
"We have one case claiming over-exposure and we are disputing it. FOS has made a decision without the full facts", says AWD spokesperson Patrick Connolly.
"We have clients with Keydata policies but we do not have a concern. These products have not been mis-sold."
He also says only "a handful" of clients have complained about the advice they were given by AWD on Keydata.
This is the second FOS recommendation relating to Keydata investments.
In a landmark case in August, the Ombudsman ruled Norwich & Peterborough Building Society (N&P) had given unsuitable advice to an elderly couple who invested in Keydata following a meeting with one of the building society's IFAs.
N&P, which is appealing the ruling, has been ordered to pay the couple £28,000, plus compound interest, to return the customers to the position they would have been in had they not invested with Keydata.
Both cases were handled by Birmingham-based law firm Regulatory Legal, which says it is dealing with some 300 clients who invested in Keydata, with investments ranging from £4,000 to £2.2m.
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