Three firms, Westscott Financial Services, CBHC and DTE Risk and Financial Management, filed the application in October last year to waylay the Financial Ombudsman Service’s (FOS) decision after five complaints were made by former Keydata clients.
In each case the stay was refused and the FOS upheld the complaint and directed the financial adviser to pay compensation.
The firms then sought to halt the FOS on the outcome of the complaints until after the verdict of the FSCS litigation.
“Premature”
Westscott wrote a letter in March saying that the provisional decision was “premature” and “will in due course be proven by the court to be incorrect”.
Westscott said: “It is our firm view that in light of the FSCS proceedings which concentrate on many of the issues which are identified in the provisional decision, it is not appropriate for you to come to a final decision until judgment has been handed down in those proceedings.
“We therefore respectfully suggest that any decision in relation to this complaint should be effectively stayed until the outcome of the FSCS proceedings so that judicial weight can be added to your considerations.”
“Resolve disputes quickly”
However, the High Court judge, Mrs Justice Thirlwall, ruled that the ombudsman scheme was set up to “resolve disputes quickly”, and investors would be “tied to the uncertain timetable of the FSCS litigation in which they play no part and over which they have no control”.
Independent financial advisers were investigated following a reel of complaints by former clients, many of who are to be compensated for the failings of the Keydata scheme.
The legal battle between FSCS and the financial advisers is expected to go to trial late next year after the lead defendants were selected by the High Court in October.
