The Financial Services Compensation Scheme (FSCS) has agreed to pay compensation to thousands of clients of failed discretionary fund manager Beaufort Securities.
Over the weekend a first tranche of cash and assets were returned to Beaufort clients through collaboration between the FSCS and the company's special administrators PwC.
At the same time 12,000 Beaufort clients were transferred to a new broker, The Share Centre, and any remaining eligible client assets and client money not transferred in this tranche will be moved to the relevant nominated broker in later tranches.
Mark Neale, the chief executive of the FSCS, said: "I am very proud of how FSCS has helped ensure that the majority of Beaufort clients are now back on track. This is a tribute to the skills of FSCS’s specialists and a testament to the collaborative approach taken by the FSCS and PwC."
He predicted the cost to FSCS levy payers of the Beaufort default would be about £50m or less, which would be spread out over more than one financial year.
The FSCS does not expect to need to raise a supplementary levy to fund this and said it was working closely with PwC and the creditors’ committee to ensure costs are kept as low as possible.
The Share Centre agreed to buy 15,000 customer accounts from Beaufort Securities in August.
Beaufort Asset Clearing Services Limited and Beaufort Securities Limited was placed in administration by UK regulators in March 2018 shortly after the US Department of Justice brought criminal charges against the latter for its alleged involvement in securities fraud and money laundering.
Beaufort Asset Clearing Services Limited provided the clearing and custody services to Beaufort Securities Limited.
Yesterday national advice firm AFH announced it had bought a book of £130m Beaufort Securities client portfolios for £250,000.
The FSCS said it was protecting the vast majority of Beaufort’s 17,500 clients by compensating for any shortfall arising from the costs of returning cash and assets, meaning those costs will not need to be taken from client assets and client money but will be met directly with PwC.
The FSCS added that a vast majority of individual Beaufort clients were not expected to suffer any loss.
damian.fantato@ft.com
