FSCS in talks over redress for 11,000 Pritchard clients
Fears of a further hit for Financial Services Compensation Scheme intermediary levy payers related to collapsed stockbroker Pritchard have grown after the administrator said in a letter to clients that it was in talks with the scheme over options to ensure full redress for account holders.
More than 11,000 customers of the collapsed stockbroker, which was placed into administration after having its permissions stripped by the regulator in February, have received a distribution equal to 50 per cent of invested money from administrators Mazars. The distribution was due to take place on 31 July 2012.
However, the administrator said that it was working with FSCS “to determine whether other options may be available that would result in them receiving compensation in full, up to the FSCS limit of £50,000”.
The affected customers are those that had money invested with Pritchard before its accounts were frozen by the regulator on 10 February 2012 and that were not transfered away from the firm before it entered administration. This includes more than 11,000 client accounts.
Pritchard had acted as custodian of investments for Merchant Group’s structured products arm Merchant Capital, which said that it had managed to move 98 per cent of its clients assets to new custodian Reyker Securities ahead of Pritchard’s collapse.
The remaining two per cent, around £6m of client monies, was frozen at Pritchard.
In mid-July FSCS invited claims from clients of Pritchard and said it would shortly be sending out application forms to clients so that they can make a claim for compensation.
The administrator had contacted clients of the firm to ask that they agree their account balances prior to providing FSCS with details of amounts owed to clients, stating that balances had to be agreed before clients could be included in a dividend or otherwise receive redress.
Pritchard was hit with a supervisory notice by the Financial Services Authority in February over alleged breaches in relation to client asset handling at the firm, including use of client funds in its own accounts.