Norwich & Peterborough (N&P) building society has its back against the wall this morning after the FOS ordered it to compensate a customer exposed to Keydata products, in a case victims say mimics hundreds of others.
The N&P customer, who lost money in Keydata investments sold to them by the building society's IFAs, is the first to have their complaint upheld in a final decision by the Ombudsman.
An Ombudsman's decision, once accepted by the complainant, is binding. The ruling is believed to be near-identical to about 500 complaints from other customers, and is set to expose N&P to up to £10m in compensation costs.
Such a payout would cripple the building society, which is already teetering closer to losing its independence and is being circled by JC Flowers among others as a takeover target.
On Friday, the building society denied the FOS had found it liable for compensation, but it u-turned on the statement in reports over the weekend.
Gareth Fatchett, parter at Regualtory Legal which is acting on behalf of 500 N&P customers, says: "This case is the first Final Decision against N&P. It was launched earlier than all the rest and has been hard fought.
"As the advice template is the same as many hundreds of other complainants, we believe this to be "the beginning of the end" for N&P's rejection of complaints."
He says N&P has blanked many hundreds of their customers for months in a vain attempt to push people toward the less generous FSCS.
"Many N&P customers have remained resolute under this pressure. They have always said that the advice was poor and that they should be compensated on this basis," he says.
"No doubt N&P will seek to play this down. However, the writing is on the wall. We hope N&P see sense and moves to settle matters."
N&P's Keydata exposure arose in 2006 and 2007 when it advised 3,100 customers to invest £53.9m in Keydata bonds.
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