Levy-hit Rathbone in call for Keydata probe

A full independent inquiry into the collapse of investment firm Keydata must be launched, wealth manager Rathbone Brothers said today, after it was hit with a £3.6 million levy to compensate victims.

Private-client brokers and wealth managers have been outraged at the extra £233 million interim levy bill they were landed with by the Financial Services Compensation Scheme last month, largely to cover Keydata's clients' losses.

Rathbone's bill meant its pre-tax profits in 2010 were £30.1 million, a rise of only 2%.

On an underlying basis (excluding the levy) profits increased by 19%.

Chief executive Andy Pomfret said: "It is very unfair that we have been hit with this charge when it is in an area which has nothing to do with our business and where it looks pretty much like there were some serious regulatory failures.

"We need an independent inquiry by, say, a leading accountancy firm, to find out what went wrong and to learn the lessons from that."

Pomfret has been at meetings with his opposite numbers at several firms discussing whether or not to pay the levy.

He said: "I think we are all concluding that we will pay up but we are definitely challenging the levy and want to make sure that this does not happen again."

Funds under management at Rathbone rose 19% last year to £15.6 billion with many of its clients increasingly ready to invest in shares as interest rates remain low.