Another FSCS adviser bill looms as scheme writes to MF Global clients
Share
Mark Neale
The Financial Services Compensation Scheme is to send MF Global UK customers application forms for compensation in a move that is likely to trigger another large FSCS bill for advisers.
The UK subsidiary of the failed investment brokerage was placed into special administration in October and is classed by the FSCS as in the investment intermediation sub-class which advisers would have to pay claims for, according to a list acquired by Money Marketing through the Freedom of Information Act.
The FSCS has worked with the FSA and administrators KPMG to “understand the potential impact on customers”. According to the FSCS, some customers may have eligible claims.
Mark Neale, chief executive of the FSCS, says: “We are very close to being in a position to start sending application forms to relevant retail customers of MF Global who may have claims.
“Once customers receive their application form from us, we ask that they complete it and return it as soon as possible.”
The FSCS is also encouraging customers to respond to client and creditor claim forms sent by KPMG, as it will not affect the ability to apply to the FSCS.
New York-based MF Global Holdings, which owns the broker-dealer, collapsed on October 31 after $6.3 billion exposure to eurozone debt failed to pay off. Jon Corzine, its chief executive, resigned on November 4.
James Giddens, the trustee overseeing the company’s bankruptcy, estimates that there could be up to $1.2 billion (£760m) in missing funds when the case is wrapped up. No estimates have been given as to the potential losses of clients in its UK subsidiary.
If you enjoyed this article, sign up here to receive daily email updates from Money Marketing and Follow @_moneymarketing
View results 10 per page | 20 per page
Related images
Most popular
Most commented
-
Ukip calls for RDR to be scrapped
-
Nic Cicutti: Advisers must take responsibility for products
-
Standard Life to pay platform clients' 2013 rebate tax bill
-
Money Advice Service calls for evidence to help form new five-year strategy
-
Steve Webb interview: Govt reviews pension rules in fight against liberation
Most emailed
-
Barclays to cut Help to Buy deal by 0.5% and launch lowest-ever 5-year fix
-
Why target date funds work better for all
-
Money Advice Service calls for evidence to help form new five-year strategy
-
Financial transaction tax: A levy sans frontières
-
CWC Research: How to build a successful advice firm post-RDR
Readers' comments (16)
Dominic Thomas | 9 Dec 2011 12:44 pm
The financial services industry is determined to eat itself.
Unsuitable or offensive? Report this comment
huw | 9 Dec 2011 12:46 pm
Excellent news, we'll look forward to that. Splendid.
Unsuitable or offensive? Report this comment
Michael Fallas | 9 Dec 2011 12:53 pm
Not eat itself but gobble up and discharge all those it can make pay for it's failures
Unsuitable or offensive? Report this comment
Anonymous | 9 Dec 2011 12:55 pm
Is it not about time financial advisers said "No - we're not playing this game any more".
Either a fund/manager is fraudulent or not. In the former - is that not what the FSA is supposed to pick up? If they're not fraudulent and just incompetent at running a business - is that not what the FSA is supposed to pick up?
If it's just crap fund performance - caveat emptor you walked into it with your, usually greedy, eyes open - tough.
Is there a solution? I bet if, on a rotating basis, no business was submitted to the big players in the market things would change pretty damn quick.
Unsuitable or offensive? Report this comment
Wheatley IFA Limited | 9 Dec 2011 1:02 pm
So, yet again the ones who are not responsible end up paying for it. There is something ethically and morally wrong with how this industry apportions redress. It is completely obvious that the rules do not meet the fit and proper ideals that the regulator sets.
If Tesco had to compensate 5000 customers for wrong doing does it mean that Asda, Sainsbury's and the like have to put their hand in their pockets?
Unsuitable or offensive? Report this comment
Julian Stevens | 9 Dec 2011 1:08 pm
Plenty of advisers are already saying No we're not playing this game any more, hence there are already 8% less IFA's now than there were a year ago. But, if you say No, we're not playing this game any more, you'll have to accept that you'll have to quit the game altogether, because the terms of all demands from the FSA, the FoS, the FSCS and the MAS are all pay up or pack up.
That having said, the FSA and the FSCS have failed even to try to explain how, unless misappropriation of client monies has occurred which, let us not forget, would be a criminal offence, the failure of an intermediary can involve client losses. Surely, clients lose money only when a provider goes down?
This seems to be yet another mechanism with which to skewer the already hard pressed IFA sector.
Unsuitable or offensive? Report this comment
kevin murphy | 9 Dec 2011 1:17 pm
Don't know about 'last one out switch the lights off' - but last one standing is going to have one hell of a FSCS levy to pay!!
Unsuitable or offensive? Report this comment
Stanley Kirk | 9 Dec 2011 1:41 pm
The scale of the MF Global losses are raising an eyebrow even in the USA where the assumption was that client money was ring fenced. It wasn't, due to a process called 'hypothecation', yet another method whereby financial institutions turn your money into their money which then disappears.
Why does this matter to us - how big could their UK business be? Try 100% of the losses. Why - because every MF Global client had a UK account because the UK rules on Hypothecation are 'lax'.
So does this mean that UK advisers will be paying compensation to USA investors - that's the implication of this mess!
Unsuitable or offensive? Report this comment
terry | 9 Dec 2011 2:07 pm
This is getting beyond a joke. The FSA and its cohorts the FSCS, FOS, MAS are screwing us to the wall. I still do not think they understand being in business at all. In addition to the above there are other on costs, offices, utility bill, staff,
PI cost Data protection OFT costs, the FSA are trying to take our income from us in the form of trail commission, ordinary commissions etc. Its not Einstein to work out if you are squeezed from the top and the bottom, the middle collapses. Apart from this it is morally wrong that we should pay for other peoples errors( i use the word error)to be polite. Thats my rant for this week, I cannot wait for next week
Unsuitable or offensive? Report this comment
bertie | 9 Dec 2011 2:18 pm
right on stanley and this is one of the things that cameron exercised the veto on so as to enable the city to keep on doing it
Unsuitable or offensive? Report this comment