So far the FSCS has received 85 claims against the firm and the FSCS says it will treat these claims as a priority.
FSCS spokeswoman Sarah McShane says the default will fall on the investment intermediary class but it is unlikely that an additional levy will have to be raised.
She says: “Yes IFAs will be hit by this but it is a fairly standard default and we don’t think this will result in higher charges.”
This year, advisers have been hit with huge increases in FSCS costs due to misselling claims against stockbrokers Square Mile Securities Ltd and Pacific Continental Securities Ltd. Investment advisers, who sit in the same FSCS bracket as such firms, face a £44m levy this year compared to £9m the previous year.
Baronworth Investment Services director Colin Jackson says: “It seems unfair that the whole IFA community should foot the bill for things that are out of our control. Surely the scheme should be Government funded.”
In March the liquidator, Smith & Williamson, said segregated fund clients would receive up to 95 per cent of their positions as at February 15, 2008 when the company went into liquidation.
Smith & Williamson said it would distribute approximately £2m to the 160 segregated fund clients by the end of April, subject to any appeal or application.
Global Trader Europe went into administration on February 15, 2008 and creditors’ voluntary liquidation on June 17, 2008.
The firm does not have the money to pay claims against it, so the FSA declared it in default.
The FSCS says Smith & Williamson intend to pay a further dividend to creditors by the end of July. Once the FSCS receives confirmation of the amounts paid to customers by the liquidators, it will begin processing claims against the firm.
FSCS chief executive Loretta Minghella says: “Help is on the way for customers of Global Trader Europe. We are working closely with the liquidators and hope to make the first payments to customers of the firm shortly. You may be able to claim up to £48,000 if you have lost money from your dealings with the firm.”