The FSA has been called upon to instigate a full review of its authorisations procedure following the collapse of Keydata.

The Association of Independent Financial Advisers (AIFA) believes the news that the Financial Services Compensation Scheme is to pay out up to £50 million, in addition to existing liabilities, risks breeching the cap placed on the investment intermediation sub class for the first time since the new scheme was introduced.

Chris Cummings , director general of AIFA, said: “Keydata portrayed itself to be a product manufacturer yet the cost of its collapse is being picked up by the IFA profession. This is clearly an issue for the regulator as it has allowed a firm to position itself as one thing and yet be authorised as another. If this was known by FSA