FSCS urges clients of failed broker AFX Markets to claim compensation
Investors, who lost more than £7million in the AFX Markets’ collapse, were given fresh hope today as Britain’s lifeboat system said it is now open to claims from victims of the company’s UK operations. This becomes clear from the latest update posted today by the Financial Services Compensation Scheme (FSCS) into the matter.
“Working closely with the Joint Special Administrators (JSAs) from CG&Co, FSCS has agreed on a process with the JSAs to review customer claims and pay compensation on eligible claims,” the FSCS said.
Explaining further, the scheme said only customers who were clients of AFX Markets Ltd may qualify to receive compensation. Owing to the complexity of the AFX Markets failure it said they will review claims on a case-by-case basis.
“The JSAs will determine whether a customer was a client of AFX Markets Ltd. FSCS will rely on the JSA’s judgement as to whether a customer was a client of AFX Markets Ltd. Customers will need to agree their outstanding balance with the JSAs. If the JSA has confirmed points 1 and 2 above to FSCS, FSCS will then consider whether the claim is eligible for compensation under our rules set for us by the FCA,” the statement further reads.
FSCS says it completed its initial review into the activities of the firm and will shortly contact clients of AFX Markets Ltd to submit claims via an online claims service.
AFX has been ordered by regulators in Cyprus and the UK to cease any activities that would involve releasing client money and securing its books and records for inspection.
Except for the investor compensation schemes in both the UK and Cyprus, there is little to no good news for the clients of both brands, the UK firm and the Cypriot arm of AFX Capital Markets Ltd.
The special administrators of AFX Markets disclosed to the regulators that the company was in terrible financial difficulty and that it had a heavy shortfall in client money of more than £7.3 million.
In addition, CySEC said its probe suggests that there is likely to be a material deficit in client money.
The watchdogs previously identified AFX’s lack of necessary safeguard procedures to protect client assets and raised concerns about its ability to hold sufficient funds in its coffers to settle obligations.
Moreover, AFX’s collapse was expected as it had problems earlier with its UK operations. In 2019, the British watchdog confirmed the appointment of special administrators at the AFX Markets, which was ordered to cease its trading activities after the FCA found serious problems in its operations.
A month earlier, CySEC suspended AFX Capital Markets Ltd, which was fined by the Cypriot regulator in 2017 after they broke another law regarding misleading information. Additionally, this suspension applied to AFX-owned subsidiary STO, which uses the same authorization (DI87-05).
AFX Group was the second-largest European subsidiary of AFX Markets, and according to reports it submitted to the FCA some 1200 client accounts were holding assets worth £7.8 million with the company.