The Financial Services Compensation Scheme has started paying compensation to MF Global UK customers, with over £130,000 paid out of an estimated £27m-worth of claims.
The FSCS has sent compensation claim forms to over 10,000 customers, including over 4,000 investors with individual accounts.
Investment advisers have been hit with a £60m interim levy for 2011/12, with MF Global claims alone expected to account for almost £27m.
The FSCS has told MF Global customers it cannot process claims until investors have agreed their balances with MF Global UK special administrator KPMG.
KPMG will then provide information on agreed balances to the FSCS to allow it to assess claims and make payments to eligible claimants.
The FSCS is making all compensation payments in sterling, converting any US dollar balances provided by KPMG as at October 31 when the firm collapsed. All payments are being made by cheque.
Where positions were liquidated after October 31, clients will get one balance which reflects the value of their position at the close of business on October 31 and another final balance reflecting the value of the positions once liquidated. Provided they agree to both balances, interim distributions made by KPMG and payment by the FSCS will be based on the lower of these two balances.
MF Global UK, the UK subsidiary of the failed investment brokerage, was placed into special administration in October. New York-based MF Global collapsed on October 31 after a $6.3bn exposure to eurozone debt failed to pay off.
Bloomsbury Financial Planning partner Jason Butler says: “Compensation is taking a long time but each claim needs to be assessed properly.
“It is not unreasonable that compensation will take longer when you are dealing with esoteric investments, that is the risk investors take. As an adviser, I am just sick of having to pay every time a firm fails.”