FSCS to consider claims against Merchant Capital Limited

26th October 2015

The Financial Services Compensation Scheme (FSCS) is preparing to assess claims against Merchant Capital Limited.

We have received claims against Merchant Capital in relation to charges deducted from maturity proceeds of certain structured investments by Reyker Securities. Reyker acted as custodian of the relevant investments. FSCS is working to finalise a process for these claims. We expect to be in a position to publish full information on our website by the end of November 2015 about what affected customers need to do to claim from FSCS.

Customers don’t need to take any action at this time. However, if you have any queries please contact our Customer Services Team on Freephone 0800 678 1100 or 020 7741 4100.

Background

FSCS declared Merchant Capital Limited in default on 14th April 2014 after it was placed in Creditors’ Voluntary Liquidation in 2013.

Merchant Capital was the plan manager of around 230 structured investments.  It also took responsibility for managing other products from plan managers such as Keydata Investment Services Limited, Arc Capital & Income PLC and Dawnay Day Quantum.

Separate companies were responsible for providing safe custody of the structured products managed by Merchant Capital, including Reyker Securities PLC from March 2012. Reyker Securities was responsible for the ongoing administration of the structured investments, and the administration of income and maturity payments.

When Merchant Capital was plan manager it agreed to cover the costs in relation to the administration and safeguarding of the investments for some plans. However, when it failed in 2013 it could no longer meet those costs, which are now deducted from maturity proceeds paid to investors.

FSCS considers that in certain circumstances Merchant Capital is liable to investors for certain costs where Merchant Capital contracted with investors that no additional costs would be incurred during the lifetime of the investment for standard administration and safeguarding of the investments.

Jargon Buster

  • In default

    A firm unable, or likely to be unable to pay claims against it. This will generally be because it has stopped trading and has insufficient assets to meet claims, or is in insolvency.
  • Investment

    a financial product in which money can be invested to earn interest or profit (although the value of investments can go down as well as up).