Collapsed discretionary fund manager (DFM) Strand Capital has been declared in default by the Financial Services Compensation Scheme (FSCS).
In March it was revealed the London-based DFM was closing down.
Financial statements filed at Companies House covering the year to 30 June 2016 said Strand Capital has £86 million of funds under management and partners with 10 IFAs.
According to a notice published by the Financial Conduct Authority (FCA) Strand Capital currently has around 3,000 clients.
It followed a decision by Strand's parent company Optima Worldwide Group that it no longer wanted the DFM as part of the group, after a failed management buyout from the investment manager Hamilton Keats.
In May Strand Capital with Smith & Williamson and Virgil Levy of LA Business Recovery appointed as special administrators.
The special administration regime was set up by the government in 2011 to deal with investment companies which hold client assets when they collapse. Its main aim to make it easier to return money to clients. However, at the time the FCA said it could not guarantee that all money would be returned to clients.
Now the FSCS has said the firm has fallen into default, according to our sister title New Model Adviser.
According to July administration report for the firm, the special administrators are working ‘closely with the FSCS to proactively identify any shortfall’.
‘The joint special administrators are working closely with the FSCS to proactively seek to pay compensation to claimants, without clients having to submit a claim form. The compensation is subject to a limit of £50,000,’ the administrators report said.
The report said much of the asset units are comprised of property-based corporate bonds, which provide loans against commercial and residential developments.