Another FSCS adviser bill looms as scheme writes to MF Global clients
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.