Thursday, 31 January 2019 09:01

Beaufort Securities FSCS compensation bill hits £22m

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The Financial Services Compensation Scheme has revealed that it has so far paid out £22m to the 16,000-plus victims of the Beaufort DFM collapse.

The investor compensation scheme told Financial Planning Today that the amount covered all investor costs so none are out of pocket and “can have their accounts returned to them.”

Industry experts have estimated that the total cost to bail out Beaufort could eventually total £50m.

The overall cost of the special administration rescue scheme and the amount owed to trade creditors is not known. There are also potentially criminal proceedings pending from US regulators which could mean considerable legal bills.

A spokesman for the FSCS said, however, that if the special administration scheme managed by PricewaterhouseCoopers (PwC) was brought in under budget there may be a reduction in the total amount payable by the FSCS.

The FSCA said that “no recoveries” are expected from Beaufort, suggesting there was little left in the kitty when the firm went under.

The spokesman added that there was still considerable work to do to resolve the Beaufort collapse, including compensating 1,400 remaining investors, many with more complex overseas holdings.

He said: “FSCS will be liaising with the administrators to enable the remaining ongoing transfers and payment, making decisions on the negligence claims and continuing to work with the special administrators to achieve the most efficient conclusion.”

This week the Financial Services Compensation Scheme announced it had compensated a further 754 clients of failed DFM firm Beaufort Securities, pushing the number so far paid out to 16,100. The majority of Beaufort’s 17,500 clients have now received compensation from the FSCS.

The vast majority of individual Beaufort clients are not expected to suffer any loss.

Assets and cash are being returned to them through a collaboration scheme organised by the FSCS and special administrators PwC.

The victims were clients of Beaufort Asset Clearing Services Limited (BACSL) which 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 last year. 

This came 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.

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Last modified on Friday, 01 February 2019 09:20
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