Merchant Capital makes plans after FSA action on Pritchard

Merchant Capital has been forced to make provisions for its structured products division after the FSA took action over Pritchard Stockbrokers.

Pritchard Stockbrokers, which holds client monies for Merchant Capital’s structured products division, has been told not to carry on any regulated activities by the FSA.

In a notice, the City regulator says it was preventing the stockbroker from carrying on any activity under its Part IV permission, while assets have been frozen without FSA permission.

In a market statement, Merchant Capital’s parent Merchant House Group says it “is in the process of making arrangements for the handling of client monies with alternative providers”.

“The board of MHG does not believe that the group or any of its clients will suffer economic loss as a result of the notice,” it adds.

The FSA took the action based on “serious concerns” that the stockbroking firm had “failed to arrange adequate protection for clients’ assets when it was responsible for them” and “allowed client money to be used on Pritchard’s own account and not that of clients”.

The regulator says it was not satisfied the stockbroker was a “fit and proper person” and had acted to protect consumers.

Pritchard Stockbrokers also offers a range of other services including a discretionary managed portfolio service, advisory managed portfolios service.