This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. Find out more here.

FSCS levy fears at spread-bet firm Echelon default

  • Print
  • Comment
Nicole Blackmore
Spread-betting firm Echelon Wealth Management went into default last week, raising concerns among intermediaries that the Financial Services Compensation Scheme levy for investment advisers may rise.

This follows the collapse of stockbrokers Pacific Continental Securities in January and Square Mile Securities in February, costing advisers 38m in additional FSCS levies.

An FSCS spokeswoman says it is too early to say if IFAs will face additional costs due to the default of Echelon.

Echelon went into liquidation in October 2008 and the FSCS says up to 900 customers could claim for compensation.

Thirty-five investors have already made a claim for compensation and the FSCS says they will be a priority. It adds that it expects to make the first compensation payments in June. Liquidators Smith and Williamson are working with the FSCS.

The FSCS will send application forms to Echelon customers by the end of June. Once the FSCS gets information from the liquidators, it will start processing claims.

FSCS chief executive Loretta Minghella says: "The FSCS is gearing up to help customers of Echelon Wealth Management Ltd. You may be able to claim up to 48,000 if you have lost money from your dealings with the firm. Once you receive a form, please return it to us so we can assess your claim."

Highclere Financial Services partner Alan Lakey says: "I am really concerned that we could face more levies as a result of this default.

"Why is the IFA community paying for other people's sins? There should be a product levy of, say, 1 per cent borne by the consumer and used to build up a fund for defaults like this."

  • Print
  • Comment

Daily Email Updates
If you enjoyed this article, sign up to receive the latest news and analysis from Money Marketing.

Money Marketing Awards 2015
Put your firm forward as the leading practitioner in your field. Adviser and Advertising categories are open to entries - Enter Now.

Have your sayEdit my profile/screen name

You must sign in to make a comment

Fund Data

Editor's Pick


Do you see the value in adviser trade bodies?

Job of the week

Latest jobs

View all jobs

Most recent comments

View more comments