pa analysis fscs costs reyker

If the way investors are being treated in the Reyker Securities/Merchant Capital saga is not bad enough, the way the various parties are communicating with the outside world beggars belief.

pa analysis fscs costs reyker


At face value,Reyker Securities taking over the structured product book of Arc Holdings and Keydata should have been a positive thing for the 12,000 investors concerned.

A woeful defence

The company did so following the demise of Merchant House Group and Merchant Capital (following the earlier demise of Arc and Keydata) and the collapse of its stockbrokers, Pritchard Stockbrokers – spotting a theme yet?

In effect they did the decent thing, doing the industry a favour by looking after clients left stranded by others’ promises of the best intentions.

Unfortunately, after just a few weeks, investors received a communication informing them on top of a one-off £15 registration fee they would also be hit by a fixed cost of a minimum of £75. On top of this is a £115 a year charge for capital products (with a lifetime cap at £500) and £195 (capped at £600) for income products. And then there’s a £3.50 postal charge, a £20 pricing fee…

And these are all charges per investment not per investor.

As far as the investors are concerned, most of the communication they have had in the past few years has been about how the company running their investment could go/is going/has just gone bust.

Reyker’s is not exactly covering itself in glory in its current communication strategy either. When approached for a comment, a charming lady who picked up the company phone confirmed it could not comment on the current situation at all and instead kindly directed me to the company’s website.

Poor up front

Asked specifically if there was anybody at all who could talk me through the background to the charges being levied, or the amount of those charges, my reply was there is nobody at the firm who is able to communicate on this whatsoever.

Looking on the bright side, if Reyker’s had not stepped in, the investors would have been left to the vagaries of the Financial Services Compensation Scheme (FSCS). But this does not get a mention, not even from the FSCS.

The best the self-proclaimed “statutory fund of last resort for customers of financial services firms” can say is along the lines of not being able to speculate on speculation. Handily, I did get sent a copy of the FSCS Comp Rules handbook. Here it is: Good luck…

It is the FSCS, or even the FCA, that should now pick up the communication baton because as well as being the final arbiter of how customers should be treated fairly they do have previous where this is concerned.

As Ian Lowes, managing director of Lowes Financial Management says, it is they who oversaw the original transfers of the previous providers’ books to Merchant and the subsequent appointment of Reyker’s.

Even though we all know it won’t, the FSCS must surely meet these investors’ reasonable costs and then explain what it will do to avoid this happening again in the future.

Q: Do you know who makes the connection between Pritchard Stockbrokers – reported to the FSA for using client money to prop up its business and was put into administration – and Merchant House Group – owner of the Merchant Capital structured product arm that collapsed owing £1.5m to its creditors and £350,000 to HMRC which was subsequently put into administration?

A: Craig Whyte was on the board of both companies. This is the same Craig Whyte who bought an 85% stake in Rangers FC for £1 and then watched the club enter administration in less than a year.

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