Thousands of clients of failed stockbroker Pritchard could face a further nine-month wait before their money is returned, having already waited two and a half years since the firm went bust.
Documents seen by Wealth Manager suggest that around 3,500 potential claims are still to be agreed against the firm, which went into administration in March 2012.
One client, who is claiming more than £33,000, had been told by the Financial Conduct Authority (FCA) that it has ‘no role in this matter’, as it cannot press the firm to speed up the administration process.
One major factor behind the delay is the surprise emergence of two large claims that were made after Pritchard went into administration. ‘Given the size of the claims (particularly the larger one), they must be resolved before any further distribution can be made,’ a document from administrator Mazars, seen by Wealth Manager, stated.
As of 8 March this year, the administration process had cost Pritchard nearly £3.7 million, the majority of which has gone to Mazars. By this date, Mazars had paid out £11.9 million of pooled client money. Over 1,700 claims had been unsuccessful and over 5,700 had been agreed, equating to £23.7 million. Mazars identified a £3 million shortfall at this time, due to claims of £26.5 million versus pooled client cash of £23.5 million.
The Financial Services Compensation Scheme (FSCS) is working with Mazars to determine the best process to ensure clients receive compensation.
Pritchard went into administration shortly after a supervisory notice was issued by the FSA because of client money failings. It froze the stockbroker’s assets and all money held on client accounts.
Prichard’s client book was bought by stockbroker WH Ireland back in 2012. WH Ireland chief Richard Killingbeck (pictured) told Wealth Manager he sympathised with those still waiting to be reimbursed.
‘The Pritchard deal was over two years ago and we acquired all of the assets and none of the liability. The liability was assumed by Mazars. From what I understand, there are still some clients that have not been repaid the cash they had in Pritchard’s money accounts,’ he said.
‘There is no doubt about it, it is stressful for clients of Pritchard, as it is the first time in living memory that a stockbroker had gone bust. There was not the knowledge within the FCA in how to deal with this, but we helped out by taking their clients on board. There are still one or two issues, as you have identified.’
In client communication, Mazars said it had been in discussions with the FCA to ensure it had done all it can to address unagreed claims.
This includes writing to and calling clients, using tracing agents, and requesting client addresses from WH Ireland and Reyker Securities, which took over as custodian.
Once these steps have been concluded, Mazars intends to seek directions from the court with regard to claims that have still not been resolved.
The FCA and the FSCS declined to comment. Mazars was unavailable for comment.