IMA: FSCS levy judicial review ‘less likely ‘

The IMA has distanced itself from earlier proposals to launch a judicial review into the funding of the FSCS, as it looks at "other options" to tackle the levy on behalf of its members.

It has been mulling the case for a legal challenge to the way the levy is allocated since January, after its fund manager members were forced to contribute to a £233m compensation bill primary linked to the failure of Keydata.

A spokesperson for the body says a review is now "less likely" to be the best course of action for members.

However, an alternative route still on the table is to invest in Lifemark, the Luxembourg company which backed Keydata bonds.

About £242m of the total £326m FSCS interim levy relates to Keydata compensation costs including a large chunk linked to claims against Lifemark, which is suffering severe liquidity problems.

As revealed in IFAonline last month, the IMA's Guy Sears has confirmed the body is leading efforts to shore up Lifemark as part of a bid to recoup the fund management sector's FSCS bill.

The body is still carrying out due diligence to see if by investing in Lifemark some of the industry's levy could be repaid, the spokesperson says.

However, the IMA is keen to make those in the industry who mis-sold Keydata pick up a greater part of the cost of its collapse, and is looking into "other options" to get members' money back, the spokesperson says.

"We want to make sure we do not disadvantage bondholders, this is the most important thing.

"But our members have been unfairly picking up the tab for this," she says.