Another Update on the SVS Special Administration

This blog gives you the latest topical news plus some informal comments on them from ShareSoc’s directors and other contributors. These are the personal comments of the authors and not necessarily the considered views of ShareSoc. The writers may hold shares in the companies mentioned. You can add your own comments on the blog posts, but note that ShareSoc reserves the right to remove or edit comments where they are inappropriate or defamatory.

Since my last update, there have been several significant developments:

  • Leonard Curtis have published a “Statement of Proposals”, setting out their plans for returning client money and assets
  • A creditors’ meeting has been held and a creditors’ committee has been appointed
  • Scammers have been trying to defraud SVS clients
  • Another firm, Reyker Securities, enters special administration


Avoid the Scams

Sadly, in cases like this, scammers will often prey on the worries of clients of failed firms, suggesting that clients might lose all or a large part of their investments but that they can help recover your money – for a fee. We have heard that such scams are indeed operating in the SVS case.

DON’T FALL FOR IT. As you will see below, the vast majority of SVS’s clients will not lose anything and do not need to pay 3rd parties to recover their assets.

If you are contacted by someone offering to “help” in this manner, try to get their details and report them to the FCA, here:

Leonard Curtis Statement of Proposals

The statement of proposals can be read here:

As anticipated in my earlier post, LC’s proposals broadly follow the template established in the Beaufort case. The report includes the following key points:

  • No material discrepancies between the company’s records and assets held in custody have been identified, following an audit. Therefore, subject to agreement of those records with clients, and settlement of administrators costs (which should be covered by the FSCS, in most cases), clients can expect a full return of their assets.
  • LC is negotiating with other FCA authorised firms to take over the SVS client accounts, thus restoring access to client assets and money, through the new firm, once the assets and money have been transferred.
  • Statements will be issued to SVS clients, showing their money and assets held with SVS, according to SVS’s records (these should all have been received by 30th September). An online “portal” will be created and clients will receive instructions for using that portal to confirm that the statements appear correct, or to raise/dispute any discrepancies. LC indicate that this portal will be available in early November.
  • A bar date will be set, before which any disputes need to be lodged, so that all claims can be taken into account when assets are transferred and there is  a definite cut off, meaning that there cannot be further claims (against other clients’ assets or against LC) once the transfer has taken place.
  • A creditors’ meeting was called for 10th October.
  • At this stage, LC propose that their costs be levied as a fixed percentage of client money (this is a requirement under the special administration rules) and as a fixed, capped amount for each transfer of client assets. That should mean that the cost amount per client should fall well within the FSCS compensation limit for nearly all eligible clients, and hence will be covered by the FSCS (as was the case for Beaufort clients). Combined with the fact that no material shortfall in client assets or money has been discovered, that should mean that few clients suffer any losses.


FSCS Compensation Limit

I would like to clear up possible confusion regarding the FSCS compensation limit of £85,000. This limit applies to losses per client per firm. It does not relate directly to the value of each client account. In this case, there are two potential sources of loss (given that LC have stated that there are no material discrepancies between client account records and assets/money held):

  1. Costs of the special administration. Given that it is proposed that costs be distributed equally per transfer of client assets (though those with large cash holdings could suffer some loss as costs are levied pro rata to the client money value) the cost/loss per client is likely to be small and well within the compensation limit.
  2. Claims for compensation where SVS did not comply with FCA rules when dealing with discretionary or advisory clients. Given that SVS has no residual assets to pay such claims, they would be covered by the FSCS, up to the compensation limit. LC say: “Clients who believe they have such a claim (for example in relation to negligent advice) will soon be able to submit their claims via the FSCS online portal at” Note that there should be no need to claim to recover the special administration costs and you should not use the FSCS online portal for that purpose. LC say: “the FSCS will seek to provide compensation in respect of eligible Clients without it being necessary for a claim to be submitted in most cases.” In the Beaufort case, which I expect to be replicated here, most client accounts were returned whole and intact, with special administration costs being paid directly to the special administrator by the FSCS, rather than being deducted from client accounts.

Creditors’ Meeting

A ShareSoc member attended the creditors’ meeting on 10th October and has reported back as follows:

A very good client and creditors meeting today with plenty of reassurance from LC and the FSCS. Key points are that they have narrowed the choice of brokers down to 3 to do a single transfer to and will confirm this by the 31/10.

The proposals from LC were emphatically agreed as was the establishment of a creditors committee which will include a member of the FSCS (who will probably be paying all of the costs) plus several experienced investors and an eminent retired lawyer, plus 2 more.

I think our private investors interests will be well served.

Clearly the committee need to ensure that the costs for returning custody assets are equally spread among each client rather than as a percentage which is how the client monies will be charged and this is what the article in the FT seems to suggest as well which is good… “At present, the administrators propose that those costs will be levied as a percentage of client money and as a fixed, capped amount for each transfer of custody assets. This basis will be subject to agreement by the creditors’ committee”.

So apart from this the committee will hopefully ensure the process is as quick as possible, subject to the bar date process being followed.

What Next?

Clients should by now have received their statements from LC (if not, contact LC to chase). Check your statement carefully and once LC open their SVS client portal, confirm your satisfaction with the statement, or dispute it, if you believe it to be incorrect.

According to the comments from the creditors’ meeting, we should hear before the end of this month which broker(s) have been selected to receive your assets. If you are not satisfied with the nominated broker, there should be an option to transfer your assets to a different broker of your own choice, without charge.

LC, the FSCS, the FCA and the creditors committee will work to: a) agree the basis for reimbursement of LC’s fees and expenses; and b) complete the formalities to transfer your assets. It currently seems likely that the transfer will take place in the first quarter of 2020.

Watch for news on progress from LC.

…And Now the Bad News

Within the last few days the FCA has announced that yet another firm, Reyker Securities, has entered special administration.

Sadly this seems to be a common occurrence now amongst smaller brokerage firms. I would advise extreme caution if using such a firm. Given the current Special Administration Rules, it seems advisable to minimise the amount of cash held in your account with such firms. Under the Rules costs relating to a special administration must be attributed pro-rata to client money, so anyone holding large amounts of cash with a firm that enters special administration could find themselves liable for costs that are disproportionate to their overall account size (albeit proportionate to the cash amount). It is possible that costs in such cases could exceed the FSCS compensation limit (though the cash amount itself would have to significantly exceed the limit for this to be a concern).

ShareSoc continues to campaign for improvements to the Special Administration Regime, such that assets are returned to clients more expeditiously and at lower cost. Sign up here if you would like to support our campaign and do join ShareSoc if not already a member.

Mark Bentley, Director, ShareSoc

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