The Financial Services Compensation Scheme (FSCS) expects to pay out £6 million over collapsed discretionary fund manager (DFM) Strand Capital.
Last March New Model Adviser® revealed Strand Capital, which had around 3,000 clients, was set to close down and Smith & Williamson. LA Business Recovery was later appointed as special administrator for the company.
The collapse of the firm followed a failed management buyout and a decision by Strand's parent company Optima Worldwide Group that it no longer wanted the DFM as part of the group.
In the latest administration report, Strand Capital was said to have £100 million of client assets under management.
In its 2018/19 business plan the FSCS noted in the past it has paid out large amounts over investment firms which have gone into default.
‘While we have no reason to believe that a large investment default is likely, there is an uncertainty around the costs to FSCS from Strand Capital,’ the lifeboat said.
The FSCS has said it expects to pay out compensation of around £6 million over the DFM ‘for client assets and potentially additional compensation for mis-selling or negligence claims’.
For the investment intermediation class the FSCS has said because of possible ‘unforeseen failures’ it is raising the levies on a 36-month rolling average.