Regulation 

Custodian denounced to FCA for ‘unfair’ investor charging

Ian Lowes, director of Newcastle upon Tyne-based Lowes Financial Management and founder of Structured Product Review, alleged fees imposed by custodian Reyker Securities on investors in former Merchant Capital Limited products, and the alleged lack of subsequent appropriate regulatory action, amounted to “unadulterated profiteering”.

Ian Lowes, director of Newcastle upon Tyne-based Lowes Financial Management and founder of Structured Product Review, alleged fees imposed by custodian Reyker Securities on investors in former Merchant Capital Limited products, and the alleged lack of subsequent appropriate regulatory action, amounted to “unadulterated profiteering”.

Mr Lowes claimed that fees levied by Reyker on an estimated 12,000 private investors after it took over the administration of the investments had been “far in excess of what would be commercially acceptable, and should not be allowed by a regulator that has a stated aim of protecting customers”.

Threatening to co-ordinate complaints from unhappy investors, Mr Lowes said: “Clients were given no choice but to sign Reyker’s contract when it took over the running of the structured products.

“It demanded a payment of £15 per account to transfer to Reyker, and threatened additional penalties if these payments were not received. A further charge of a minimum of £75 per account has also been imposed, payable from the maturity proceeds of the product.”

In Mr Lowes’s letter, seen by Financial Adviser, he said that the demand came in the form of a formal, eight-page, small print “important information” document, which stated that action should be taken promptly to ensure the safe custody of investments, and the continuance of income payments.

He said: “On raising our concerns with both Merchant and Reyker at the time, we were advised that the whole matter had been conducted with full regulatory oversight, but we believe that the level of charging should not be allowed.

“The regulator should have been more interventionist.”

After Merchant Capital went into administration in January, Reyker Securities instigated wind-up proceedings.

An investor’s note on Reyker’s website at the time pledged to keep all assets and client money safe, stating “there is no need for investors or IFAs to do anything”.

It added: “All income payments, maturities and re-investments continue to proceed as normal. Although underlying structured product investment values may go down as well as up, all consumer holdings remain safe in Reyker’s professional custody.”

Right to reply

It is understood that the regulator would not intervene in contractual agreements. When asked about the agreement between investors and Reyker, a spokesman for the FCA said it could not comment on individual cases.

When asked whether its charges were treating customers fairly, and whether it had any comment to make about Mr Lowes’s campaign, Reyker declined to comment.