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FCA seeks to fine three men £80m over sales of ‘death bonds’
The city watchdog is seeking to fine three individuals nearly £80m for misleading investors into buying “death bonds” linked to life insurance policies.
The Financial Conduct Authority (FCA) said that the products, which were sold by a company called Keydata, were “unclear, incorrect and misleading.”
Keydata chief executive Stewart Ford is set to receive a £75m fine. The other two men, Mark Owen, former sales director, and Peter Johnson, former compliance officer, will face fines of £4m and £200,000 respectively. All three are set to appeal the ruling.
The FCA said the three individuals permitted Keydata to continue to sell the products even though they were unsuitable for individual investors.
Around 37,000 people bought the bonds between 2005 and 2009. They were incorrectly told the products were eligible for ISAs.
In total, investors lost at least £330m and are currently being refunded by the Financial Services Compensation Scheme (FSCS).
Keydata designed and sold the investment products to retail investors via IFAs. The products were underpinned by Keydata’s investment in bonds issued by Luxembourg special purpose vehicles called SLS Capital and Lifemark. In turn SLS and Lifemark invested in portfolios of life settlement policies – second-hand life insurance policies, which pay out when the original owner died.
