FSCS off the hook for Beaufort compensation

The distribution plan was agreed by Beaufort’s creditors’ committee on 13 July and approved by the High Court on 26 July.

Asset transfers are expected to start in mid-September.

Good news for levy payers

Mark Neale, chief executive of the FSCS, believes “that the approved plan will deliver in an efficient way, which will control the costs to the levy payers who fund FSCS”.

That clients were expected to recover their money and assets is not new news.

However, the FSCS had been expected to compensate Beaufort investors, who number approximately 17,000 retail and 500 corporate clients.

The firm held around £37m of money and £664m in assets.

FSCS claims

Neale said: “This is a big step on the road towards a successful resolution for clients. Under the approved plan, the vast majority of clients will receive back all their cash and assets with no need to make a claim to FSCS.

“FSCS will compensate eligible clients for the administration costs, which for assets will be capped at a maximum of £10,000 per account.

“In addition, FSCS will also compensate for the distribution costs of returning cash up to the overall limit of £50,000 for investment claims,” Neale said.

Background

Discretionary fund manager Beaufort Securities and its subsidiary Beaufort Asset Clearing Services entered insolvency in March 2018.

All client money and assets were held with Beaufort Asset.

It was revealed at the time that the firms had been given a stay of execution by the Financial Conduct Authority to allow the US Federal Bureau of Investigation to finish an undercover operation.

The US Department of Justice brought criminal charges against the company for its alleged involvement in securities fraud and money laundering shortly before the FCA took action.

In April, the FSCS announced it was aiming to reimburse circa 2,700 clients, provided their investment was worth less than £2,000.

In May, investors were dealt a blow after it was revealed they could face covering £100m in liquidation costs.

However, it was later stated that nearly all of the firm’s individual customers would be protected by the FSCS, a position that has now been superseded by the High Court ruling on 26 July.