Dozens of Norwich & Peterborough (N&P) customers who invested in failed firm Keydata say they were not given key features documents (KFDs) on the products until after they had parted with their money.
At a meeting of more than 100 N&P Keydata investors in Norwich this week, attended by IFAonline, about 90% said the building society's IFAs did not provide product brochures at the point of sale.
In November, the FSCS announced it would only consider 'eligible' claims from investors who relied on Keydata marketing brochures, as they did not comply with the FSA's rules.
But a significant number of investors maintain they did not see the documents until after they had handed over their money, effectively barring them from honestly applying for compensation.
The FSA says KFDs are "at the core" of its requirements on product disclosure, and consumers must read and understand them before they commit to an investment.
Days after the FSCS's November ruling, N&P CEO Matthew Bullock wrote to the 3,100 customers who invested in Keydata on advice from the building society's advisers to report "the welcome news", which he said he knows would "come as a relief".
However, during the Norwich meeting, one woman who said N&P only gave her a brochure "as an afterthought" was backed by scores of others.
Another investor who put £50,000 into Keydata claimed the building society's adviser never warned him the FSCS limit was only £48,000, which he said was "morally wrong".
Outcome three of the regulator's TCF requirements states consumers must be provided with clear information and be kept appropriately informed "before, during and after the point of sale".
Those N&P customers who say they did not receive KFDs now plan to pursue poor advice claims through the FOS. Ombudsman claims must be for paid by N&P, whereas the advice industry as a whole picks up the tab for FSCS claims via an annual levy.
Investment advisers have already forked out £58m on top of their annual FSCS contribution to cover the failures of Keydata, Pacific Continental Securities and Square Mile Securities, in a controversial interim levy earlier this year.
Lawyers Regulatory Legal, who act for 390 N&P customers who invested in Keydata, say the files it has been sent by N&P under numerous ‘Subject Access Request Notices' do not include brochures.
It has written to N&P asking it to take another look in its files and clarify whether a brochure was ever provided to these clients.
Gareth Fatchett, partner at the law firm, says: "It would be very convenient for N&P to get everyone to say they relied on a brochure.
"N&P's strategy is to push claims to be shared with the levy payers and the public purse."
Tony Hunt, an investor who set up the Norwich & Peterborough Victims (NAPV), says: "I feel N&P has been grossly negligent. I didn't realise I was investing in sick Americans dying on time. I think it is immoral for our little friendly to be investing in this."
An N&P spokesperson says: "It was standard practice for our financial planners to give each customer a Keydata brochure containing the key features of the plan.
"And the Suitability Report prepared for each customer and signed by them contained a checklist that asked ‘Have you received a product brochure?'
"This has not been raised as an issue before and we would be happy to send individual customers a copy of the brochure they would have received at the time."
Three funds to watch