The cost of the compensation to levy payers could be up to £50m says the FSCS.
To begin the compensation process, over the last weekend (22 and 23 September) just over 12,000 Beaufort clients were transferred to a new broker, The Share Centre. This coincided with the first tranche of cash and assets being returned to Beaufort clients.
Beaufort Asset Clearing Services Limited (BACSL) provided clearing and custody services to Beaufort Securities Limited (BSL). Both companies were placed in Special Administration by the High Court following an application by the UK regulators in March.
This was shortly after the US Department of Justice brought criminal charges against BSL and a number of individuals for their alleged involvement in securities fraud and money laundering.
The FSCS says it is protecting the vast majority of Beaufort’s 17,500 clients by compensating for any shortfall arising from the costs of returning cash and assets.
Costs will not be taken from client assets and client money as the FSCS will arrange for these costs to be met directly with PwC. The vast majority of individual Beaufort clients are not expected to suffer any loss as a result.
Mark Neale, FSCS chief executive, said: “I am very proud of how FSCS has helped ensure that the majority of Beaufort clients are now back on track. This is a tribute to the skills of FSCS’s specialists and a testament to the collaborative approach taken by the FSCS and PwC.”