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‘Test case’ goes to FSCS over Reyker charges

Two clients of Reyker Securities are submitting a “test case” claim to the Financial Services Compensation Scheme for charges imposed by Reyker after it took over as custodian following the collapse of Merchant Capital.

Reyker initially charged clients £15 to £25 per investment to receive delayed income payments when it took over as custodian. After becoming plan manager and custodian for Merchant Capital investors last year, it emerged around 12,000 clients would face hundreds of thousands of pounds in extra charges. Merchant Capital was declared in default by the FSCS in April. But it is understood the FSCS is not accepting claims against Merchant Capital that relate to the charges imposed by Reyker. The test case seeks to establish that Reyker’s charges are a civil liability resulting from Merchant’s collapse.

The clients are submitting a claim for £515, the amount they have been charged by Reyker. They argue Merchant failed to meet its obligations to them. The claim states: “Our claim is in relation to Merchant Capital’s civil liability to us for its failure in contract law to arrange safeguarding and administration of our investment at its own cost.”

The FSCS and Reyker declined to comment. 

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. Are these people claiming that Reyker should have provided its services for nothing?

    And, given that Merchant Capital has fallen into default, there’s unlikely to be any money available from that source either.

    I know, say the claimants, let’s claim on the FSCS and, with a bit of luck, the rest of the industry will have to stump up.

  2. Julian, do you ever do any work?

    All we ever see is you pontificating on here about things you “seemingly” know little about.

    Is it right that clients should pay twice for the same thing? Would the FCA accept you double charging a client?

    Lets see, you go to Tesco’s pay for your shopping and then 2 year later they contact you to say we’ve gone bust but Sainsbury’s have taken over the business and they are going to charge you for the shopping you bought from us two years ago. If they don’t then they can’t make a profit out of the deal.

    All the charges were calculated into the plan at outset and the resulting return reflected those charges. The plans ran their course and returned the capital and the income along the way. they were fine. Reyker have imposed an admin charge that they have just plucked from thin air. They did not have to take on this business but chose to. I also understand that they laid claim to some of the assets of Merchants to cover their costs and then dreamt up this additional charge as well.

    And to add insult to injury they will try stealing your clients when the plans mature. Not very ethical at all.

  3. There’s no double charging here, at least not on the part of Merchant Capital. Presumably, whatever tasks needed to be undertaken in the wake of MC being declared in default were put out to tender, Reyker’s application and presumably its proposed scale of charges were approved by the powers that be and they did what they were contracted to do. It’s hardly comparable to charging customers a second time for a tin of nbeans they bought two years ago. The MC ship went down and Reyker has been appointed to undertake a salvage operation.

    I ask again ~ are these people claiming that Reyker should have provided its services for nothing? From where could their fees have come if not by way of additional charges on the remaining investors? It’s all very unfortunate, I agree, but how could the situation have been handled any differently?

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