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FCA fine individual £75m for “death bond” mis-selling


Three men face fines of up to £80 million for misleading clients by convincing them to invest in “death bonds”.

The Financial Conduct Authority (FAC) has claimed the men sold so-called "death bonds", linked to life insurance policies, in a way that was “unclear, incorrect and misleading”.

Between 2005 and 2009, 37,000 people bought the bonds, after being incorrectly told that they were eligible for ISAs. By buying the bonds, purchasers were investing in second-hand life insurance policies, which would pay out when the original owner died.

Those investors lost a total of £330 million- the value of the bonds purchased. They are now being refunded by the Financial Services Compensation Scheme (FSCS). The FCA has ruled that bonds were not suitable for ordinary private investors, because of the risk involved.

One of the men involved, Steward Ford, has been hit with a fine of £75 million, the highest penalty ever imposed on an individual by the FCA. He was the chief executive of Keydata, the firm that sold the bonds. The FCA said he had received £72.4m in fees and commissions on sales.

Mr Ford will now contest the fine in the High Court, as he claims the FCA exceeded its powers when it decided to close Keydata down. He is now filing a £650m claim for damages against the FCA and the accountancy firm, PricewaterhouseCoopers.

Mark Owen, the former sales director, was fined £4m. He received commissions worth £2.5m, whist Peter Johnson, the former compliance officer, was fined £200,000. All three have been banned from working in financial services ever again.

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