5 May 2004

We (the FSA) have received a large number of enquiries recently from members of the KF Concept scheme and many of these enquiries are similar. The following extract from a recent letter responds to these enquiries:

"The basis of the FSA's action is that there are circumstances suggesting to the FSA that KF Concept, and the individuals involved in running KF Concept, have engaged in activities they are not authorised by the FSA to engage in and in contravention of the Financial Services & Markets Act 2000 ("the Act"). Where this happens the FSA has a responsibility to take action, where appropriate, against those involved in the contravention.

Whilst we endeavour to minimise the loss and/or inconvenience suffered by individuals in your position, our actions can have the effect, in cases such as these, of denying individuals and companies immediate access to the money they have placed with the unauthorised entity (in this case, KF Concept). I therefore acknowledge and appreciate that one of the effects of our action through the High Court has prevented the payment away by KF Concept of monies to people such as yourself pending the High Court’s decision whether the activities carried on by Kevin Foster and/or others under the name KF Concept are contrary to the Act.

The main aims of the FSA's actions are, first, to stop the suspected unauthorised activities and, secondly, to preserve such assets which exist, including monies, with a view to their being used either to continue or wind up the business of KF Concept (which would allow distribution of monies to claimants such as yourself), according to the decision of the Court. Evidence has already been filed at the High Court by the parties involved in the proceedings – the FSA, Kevin Foster, Elaine Foster and Kevin McNab – which deals, amongst other things, with the activities of KF Concept, the sums apparently owed and the assets, including monies, available to meet claims such as yours in respect of the placement of monies with the KF Concept. There is no date yet fixed for hearing of the issues but the FSA is endeavouring to bring the matter to conclusion as early as practicable.

I do appreciate that a lack of full information about what is happening is worrying for you. Whilst I will not comment on any constraints on Mr Foster giving you information about the current position, please note that the FSA is restricted by the Act (section 348) in what information it is permitted to disclose to you other than in particular circumstances. This is in some ways a handicap for us in dealing with your detailed enquiries but the essence of the restriction is to protect the interests of those persons (including Mr Foster) who are required to provide to the FSA in pursuit of its investigation information which may be confidential in nature (eg information relating to participants in the KF Concept scheme), which is deemed to be "restricted information" for the purposes of the Act. Normally, once a court has considered and decided the matter much of the information may come into the public domain, following which the FSA may be better able to respond to your queries more fully.

The mere fact of an investigation and/or civil proceedings commenced by the FSA does not make money disappear as you suggest, although it has to be accepted, for example, that some monies are likely to be required to cover associated legal costs incurred in the proceedings.

The FSA took great care in considering the information available to it before embarking on the series of actions of which you are aware and would not do so without good reasons which it needs to persuade the High Court to grant the orders that it has done thus far. Kevin Foster, Kevin McNab and Elaine Foster each has the opportunity to apply to the Court, on 2 days' notice, to have the orders against them dismissed. To date none of them has made such an application.

To dispel any misunderstanding there may be as regards assets, including money, which are subject to the High Court orders, the assets are not held by the FSA but remain in the ownership or custody of those persons who held them when the FSA’s initial action took effect on 5 February 2004, subject to any permitted diminution to cover ordinary living expenses and associated legal fees incurred by Mr and Mrs Foster and Mr McNab.

The FSA does not have a fund from which to pay interest on monies you are owed by the KF Concept, nor does it accept liability for any such claim you might consider making in due course.

Finally, I can understand your anger at being denied access to your money and to some extent why you direct that anger at the FSA. Indeed, there are a very great many others in the same position as you, no doubt feeling similar frustrations. I trust you will find this response to your enquiries of some help in better understanding the position and in allaying some of your fears. I can assure you that the FSA is striving to bring this matter to conclusion as soon as practicable and I ask for your patience meantime."

We wish to emphasise that we are in a difficult position legally when asked to provide enquirers with specific information obtained from its investigation and/or the associated legal proceedings. The Financial Services & Markets Act 2000 applies restrictions on the disclosure of such information except in certain specific circumstances.

We are also aware that solicitors acting for Kevin Foster/the KF Concept have written to members of the KF Concept seeking an indication of wishes regarding two options: (A) the transfer of the member’s funds into Mr Foster’s new venture or (B) the withdrawal of those funds in line with the membership.

We had no involvement with that letter to KF Concept members, nor can we or anyone else, say at this stage in proceedings between us and Mr Foster that either of those options will be available to members. The unwinding of the current scheme requires approval of the Court and may be undertaken in a variety of ways, which may be under the control of Mr Foster and/or an appointed independent person with suitable professional qualifications. The outcome will depend on a variety of factors, including:

  • any decisions taken by the Court (for example, whether the activities of the KF Concept are in breach of FSMA);
  • the extent of Mr Foster’s liabilities to scheme members or others; and
  • the nature, value and location of Mr Foster’s assets to meet those liabilities.

Our investigation and legal proceedings take the above factors into account. Meanwhile the restraint and asset freezing orders we obtained continue in force pending a resolution of these issues, which we are striving to do as soon as reasonably practicable. As and when we have more specific information that we may put into the public domain, we will make a further statement on our website.

Other statements regarding KF Concept

See the List of KF Concept statements for all the statements we have issued on this subject.

More Statements: