Funds returned to thousands of Beaufort clients thanks to FSCS compensation
25th September 2018: Thousands of clients of Beaufort have been reunited with their funds, thanks to the Financial Services Compensation Scheme (FSCS) agreeing to pay compensation in the wake of the firm’s collapse.
This past weekend (22nd and 23rd September 2018) saw just over 12,000 Beaufort clients transferred to a new broker, The Share Centre. Also, a first tranche of cash and assets were returned to Beaufort clients, via close collaboration between the firm’s special administrators PricewaterhouseCoopers (PwC) and FSCS. Any remaining eligible client assets and client money not transferred to The Share Centre in this tranche will be moved to the relevant nominated broker in later tranches.
Mark Neale, FSCS’s Chief Executive, commented: “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.”
Beaufort Asset Clearing Services Limited (BACSL) provided the 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 2018. 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.
Among the other ways FSCS is protecting the vast majority of Beaufort’s 17,500 clients is by compensating for any shortfall arising from the costs of returning cash and assets. This means that those costs will not need to be taken from client assets and client money. 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.
FSCS expects the cost to its levy payers of the Beaufort default to be around £50m or less, which are expected to be spread out over more than one financial year. At present FSCS does not expect to need to raise a supplementary levy in this funding class. FSCS is working closely with PwC and the creditors’ committee to ensure that the costs are kept as low as possible. The distribution plan, agreed by the High Court in July, allows FSCS compensation to be paid directly to Beaufort to cover the relevant administration costs, reduces the cash flow demand on FSCS’s levy payers while also simplifying the process for Beaufort clients, most of whom will have their portfolio returned whole without any deduction.
For more information, see the Special Administrator’s dedicated Beaufort information page at https://www.pwc.co.uk/beaufort