On 7th December 2020 the FCA published draft guidance for Insolvency Practitioners (IPs) on how to approach regulated firms and launched a consultation on that proposed guidance.
This is of particular interest to individual investors because it guides the actions of IPs involved in Special Administrations, which occur when a broker fails.
ShareSoc has been concerned about the Special Administration Regime (SAR) since we got involved with the Beaufort case. Clients with substantial portfolios were threatened with significant “haircuts” to their holdings, to pay for vast costs the administrator estimated would be required to resolve the case. Thanks to our campaign, we managed to avoid that outcome.
Subsequent Special Administrations of SVS Securities and Reyker Securities have also been unsatisfactory, with it taking an inordinate amount of time until clients were reunited with their assets in a satisfactory manner.
This new guidance from the FCA seems intended to address some of the issues arising in those cases. As such, we support the guidance and have made several suggestions for improvement in our response. However, the FCA’s powers are limited and the fundamental problems of the SAR still exist. We will therefore continue to press for reform of the SAR, to better protect the interests of investors.
You can read our response here: GC20_5 Consultation Response