FSCS expects investment intermediation recoveries of £27m in 2017/18

Maria Nikolova

Due to continued claims in this sector, FSCS adjusts its forecast costs for the year, raising the levy to £88m.

The UK Financial Services Compensation Scheme (FSCS) has published its final levies for 2017/18, increasing the levy for the investment intermediation sector by £4 million to £88 million.

In its detailed outlook, FSCS notes that the adjustment of the costs forecast for the investment intermediation sector reflects the fact that it continues to see claims in this sector. These costs relate to a variety of different claims, FSCS explains. Last year, it made a refund of £50 million to firms in this class. However, because of the historic volatility in this sector, it was decided to raise the levy on the three-year forecast model to adjust for future unexpected failures and costs.

FSCS is forecasting £27 million recoveries on this class in 2017/18. It expects the main sources to be Alpari UK and ARM (Catalyst).

In February this year, the Joint Special Administrators (JSAs) from KPMG published their 4th Progress Report, covering their work on the Alpari UK Limited case from July 19, 2016 to January 18, 2017.

The report says the Financial Services Compensation Scheme (FSCS) has taken assignment of 12,759 claims filed by ex-Alpari UK clients and has paid compensation of USD 50.8 million to 12,305 former clients of the now defunct retail FX broker.

A final distribution from the Client Money Pool (CMP) is expected before July 24, 2017. The JSAs say 16,278 clients have agreed their claim representing 96.2% by value of clients with a claim into the CMP.

The administrators have paid a total of approximately USD 51.8 million from the CMP in respect of 12,503 clients, representing approximately 53% of the CMP.

At the moment of publication of the report, the administrators estimated that the overall return to clients will be in the range of 78.3 cents to 79.7 cents in the $ (USD).

FSCS will levy firms £363 million in 2017/18, according to data published today. The sum is £15 million smaller than the one forecast in its Plan and Budget 2017/18 released in January this year.

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