Thousands of investors in failed firm to get assets back
The wealth management firm went into special administration in October 2019 following an application to the High Court by its directors.
A distribution plan was then put forward by the joint special administrators Smith & Williamson last year, which would see more than £900m in assets returned to investors, which was approved by the courts.
According to the FSCS, at the end of January the administrators started distributing these assets to five new nominated brokers, and the vast majority of customers have now had most, if not all, of their assets returned.
However, a small number of customers may have to wait a little while longer before some assets can be moved to a new broker. These are apparently assets that require third-party input, with the FSCS noting that transferring paper certificates has become more challenging due to the pandemic.
Jimmy Barber, chief operating officer at FSCS, said: “We want to thank Reyker’s customers for their patience as we recognise that it has been an extremely difficult and distressing time for them since Reyker went into Special Administration. The vast majority have now had their assets returned and we are working to ensure that the remaining few with cases that are more complex are transferred to their new broker as soon as possible.”
The role of the FSCS
The FSCS is an important safety net that protects our money should things go wrong with a financial firm.
It protects the first £85,000 that you save with a financial institution. If that firm then goes bust, you’ll get everything back up to £85,000.
It’s not uncommon for you to hear about this protection when it comes to banks and savings providers, but it can come into play with investments too. If you have invested in something, and the provider of that investment ‒ or the adviser that suggested you take it out ‒ goes bust, then that £85,000 limit is once again in place.
Importantly, that provider will need to have been regulated by either the Financial Conduct Authority (FCA) or the Prudential Regulation Authority (PRA).
What’s more, that cover is only in place if the provider goes bust. It isn’t there to cover your losses should you invest in something that then performs poorly. After all, as the FSCS points out, the nature of investing means that the value of the asset you back can go up or down.
Crucially in the Reyker case, the involvement of the FSCS has also saved the investors money as it has meant that they have not had to pay to transfer the assets over to the new brokers.