The Financial Services Compensation Scheme has sent compensation claim forms to over 4,000 private investors in the UK subsidiary of collapsed investment brokerage MF Global.
MF Global UK has over 10,000 customers in total. Investors with individual accounts have been written to first, as part of a phased mailing programme to different customer types. The FSCS will now send compensation application forms to joint account-holders and private individuals who have not been previously contacted by the FSCS. It expects to send application forms to corporate and trust accountholders by the end of the month.
Special administrator of MF Global UK, KPMG, has also started making interim distribution payments to investors. The first wave of settlements will see 600 investors paid around £7.6m, with a second wave of settlements starting this week with around £12m paid to 1,300 investors.
Claimants have to agree their balances with KPMG before the FSCS can process claims. MF Global UK clients can claim through KPMG or FSCS but cannot claim twice. Clients who claim through the FSCS will assign the rights to the FSCS, which will then have a claim on any recoveries.
In its plan and budget for 2012/13, published earlier this month, the FSCS warned it may need to raise an interim levy of at least £40m on investment intermediaries before the end of March, including expected claims related to MF Global UK.
The FSCS is working with KPMG to reconcile client accounts and says until this is done it will not know how many claims or how much compensation is likely to be payable.
Money Marketing reported in December that MF Global may have placed US business with its UK subsidiary. It is as yet unclear whether UK advisers could end up covering the cost of compensating US investors.
Page Russell director Tim Page says: “I am not happy about the prospect of an interim levy for MF Global UK but I am resigned to it. This will be the third year the FSCS has stung us with an interim levy.”