In May 2015, the FCA announced plans to fine three former members of Keydata’s senior management - Stewart Ford, Mark Owen and Peter Johnson - almost £80m collectively.
Keydata sold policies offered by two companies, SLS and Lifemark, but entered administration in 2009 after the regulator found that it had sold products via IFAs which did not comply with ISA regulations.
An investigation later found that up to £450 million of investors' money had disappeared.
As part of its case, the FCA argued that as the owner and director of Lifemark, Ford entered into service agreements with offshore companies owned by him to extract exorbitant “fees” from Lifemark totalling £73.3 million.
These “fees”, the FCA said, effectively crippled the already flawed Lifemark structure.
The Upper Tribunal ruled that there is "no doubt that the financial penalty imposed by the Authority on Mr Ford was justified in the circumstances".
It noted that the "substantial penalty" has been determined largely through the fees Ford extracted, together with an additional fine of £2,640,600 which reflects the "seriousness of Mr Ford’s misconduct and the need for a true penal element to be included within the penalty".
The Tribunal concluded that Ford "expended a great deal of time and energy seeking to show that the consumer detriment was not attributable to anything he had done, or not done, but was due entirely to the ill-conceived actions of the Authority in forcing Keydata and Lifemark into administration".
It rejected these claims and ruled that the FCA's fine was "the only appropriate sanction for such extensive regulatory misconduct".
Keydata's former sales director, Mark Owen, was fined £4m in 2016 and former compliance officer, Peter Johnson, escaped a £200,000 fine due to "serious financial hardship".
Ford, Owen and Johnson all referred their Decision Notices to the Upper Tribunal, but Johnson later withdrew his reference.
The Tribunal has also directed the FCA to fine Owen £3,240,787, and both have been banned from the financial services industry.
Stewart Ford maintains that himself, Keydata and investors were "victims of a very sophisticated fraud in respect of the SLS products" and says "there were no risks associated with the Lifemark portfolio".
Mark Steward, executive director of enforcement and market oversight at the FCA, said: "Keydata sold complex structured products backed by life settlements based on misleading brochures and without properly assessing whether the products could meet what was promised.
"The Tribunal found that Mr Ford bears primary responsibility for this, deliberately setting aside his regulatory responsibilities driven by his desire to maximise and preserve financial gain for himself. Those who commit such misconduct have no place in the financial services industry."
In a statement, Stewart Ford said: "If I must accept it, I do not and cannot agree with the Decision of the Upper Tribunal.
"Without infringing the law or my conscience, I say and believe that I have been the victim of a grave injustice. For those who truly know me, you will be aware that this Decision of the Upper Tribunal runs counter to every fibre of my being. My honour, my good name, my competence and my integrity have been impugned.
"During these past 10 years and more, I believe for questionable motives and in an effort to discredit me, I have been the subject of a concentrated and sustained attack by the Financial Services Authority/Financial Conduct Authority.
"In a much larger sense, the trust formerly placed in me by Keydata investors demands that I immediately address the Upper Tribunal’s Decision."
