The Financial Services Compensation Scheme said it is likely to meet any losses suffered by customers in relation to Wealthtek.
For customers who are eligible under the FSCS rules, the lifeboat scheme said it is likely to meet any losses suffered by Wealthtek clients in relation to the costs of returning client money and the costs of transferring any assets to a new broker - provided the particular assets are covered by FSCS's rules.
It will also cover losses in relation to client money shortfalls that have occurred as a result of Wealthtek not holding all the client money that it had undertaken to hold for that customer and client asset shortfalls that have occurred as a result of Wealthtek not holding the client assets it had undertaken to hold for that customer.
In an update last week (September 14), the FSCS said: “We have been continuing to work closely with the joint special administrators about whether there are any claims that are eligible for FSCS compensation.”
This comes as last month, the FSCS said it expects to pay out some claims against the collapsed wealth management firm Wealthtek.
At the time, it said it expected that there will be some claims that meet the qualifying conditions for compensation.
The wealth manager was ordered to stop operating by the Financial Conduct Authority (FCA) in April 2023 after discovering "serious" regulatory and operational issues.
At the end of May the regulator froze the assets of Wealthtek’s principal partner and launched an investigation after a potential shortfall of £81.4mn in client money was discovered.
Any compensation payable by FSCS is subject to the statutory cap of £85,000 per eligible customer, per firm.
Prior to any compensation payment, the joint special administrators’ distribution plan needs to be approved by the clients' and creditors' committee and the court.
This plan sets out how the customer's property will be returned to them.
The administrators will be providing more updates as their work progresses.
“We don’t yet have a timescale for how long it is likely to take to return money and assets to customers,” the FSCS said.
“We will continue to work closely with them and will provide further updates ourselves, including on timescales, when that information is available.
“At the moment, Wealthtek customers do not need to take any action regarding FSCS compensation. We remain closed to customer claims.”
sonia.rach@ft.com
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