UK Financial Services Compensation Scheme to protect certain clients of SVS Securities
FSCS will be able to protect eligible claimants within the group of ‘Elective Professional Clients holding an FX account balance’.
The UK Financial Services Compensation Scheme (FSCS) has provided a bit of positive news for the customers of SVS Securities plc, which was placed in Special Administration by its directors early in August 2019.
The latest update issued by the FSCS concerns those customers categorised by the Joint Special Administrators as ‘Elective Professional Clients (EPC) holding an FX account balance’. The Scheme will be able to protect eligible claimants – individuals and small businesses – within that group whose money has not been returned.
FSCS says it has reached this decision because of the type of investment, and because of the way the investment was held. The Scheme can cover shortfalls for eligible customers with valid claims up to the compensation limit of £85,000.
FSCS is currently working with the Special Administrators to work out the best way to return money. At this stage EPC Clients do not need to do anything. There is no need to make an application to FSCS about SVS Securities at the moment. FSCS will make further announcements in due course.
The initial meeting of clients and creditors of the company was held in October. At the meeting, the Joint Special Administrators’ proposals were approved and a creditors’ committee was formed.
The proposals of the administrators include:
- pursuing the objectives of the special administration, such as ensuring the return of client assets as soon as reasonably practicable, and either rescue the company or wind it up in the best interest of creditors.
- that the administrators move funds realised on behalf of the company into bank accounts controlled by the administrators;
- that client money and custody assets be returned to clients before any distribution to any other class of creditors being made;
- that the administrators realise the remaining assets of SVS in pursuit of the objectives of the special administration;
- that the administrators make distributions to the company’s secured, preferential and unsecured creditors as appropriate;
- that the administrators continue to investigate and pursue any claims that an officeholder and/or the company may have against any parties concerned with the affairs of the company;
- that, once the objectives of the special administration have been fulfilled, the administrators seek to conclude the case either: (i) by filing notices that the company no longer holds client assets and dissolving the company without any further recourse to the creditors or clients of the company; or (ii) put further proposals for a company voluntary arrangement.
Let’s recall that, following action taken by the UK Financial Conduct Authority to impose requirements on SVS stopping it from conducting regulated activities and restricting it from disposing of its own or its clients’ assets, the directors considered the viability and solvency of SVS. They obtained solvency advice and resolved to place the firm into Special Administration.
