Regulation  

Bulk of failed stockbroker’s clients to be fully repaid

Administrators Harrisons has announced that 99.9 per cent of non-corporate clients of failed stockbroker Fyshe Horton Finney Limited will not lose a penny of their investment money.

But the administrators admitted the picture for corporate clients is far bleaker.

Following the appointment of Paul Boyle, head of national practice, and David Clements, director at Harrisons, on 20 March 2013, the special administrators of FHF agreed a mechanism with the Financial Services Compensation Scheme, which will result in all qualifying clients, with agreed claims, receiving compensation of up to £50,000 “much more quickly than in previous special administrations”.

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Only six months after their appointment, the special administrators have returned to clients through the agreed mechanism a total of £10.9m out of a possible £16.5m (66 per cent) compared with £9.3m out of a possible £23.7m (39 per cent) in the previous comparable special administration of Pritchards Stockbrokers Ltd in 2012, the adminstrators said.

As a result of the agreement reached with the FSCS and actions to date, the special administrators believe the vast majority of the company’s non corporate clients, with claims to client monies, will have been repaid in full by December 2013.

Mr Boyle said: “Based on our current understanding, we estimate that 99 per cent of non corporate clients will recover in full all of their pooled money.

“The position is less clear for corporate clients and they will need to take advice on their possible entitlements under the FSCS guidelines.”

The sale of a number of FHF’s assets was completed shortly after the appointment of the special administrators to stockbrokers Redmayne-Bentley in a £300m deal.

The SAR for investment banks was introduced in February 2011 to improve the process where an investment bank fails.

At the time of the appointment, FHF was only the fourth special administration ever undertaken, the other three being MF Global UK Ltd, Worldspreads Ltd and Pritchard Stockbrokers Ltd.