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Failed broker's clients edge closer to meagre final payout

After years in limbo, clients in failed stockbroker Pritchard are edging closer to receiving their final cash payout, but look set to recoup only an additional 3-5p in the pound.

Failed broker's clients edge closer to meagre final payout

After years in limbo, clients in failed stockbroker Pritchard are edging closer to receiving their final cash payout, but look set to recoup only an additional 3-5p in the pound.

In the latest update covering the period from 1 September 2016 to 28 February 2017, the special administrators revealed that their solicitors have finalised the drafts of the Financial Conduct Authority (FCA) and court applications, which will conclude the distribution of the client money.

The administrators expect to make both applications – a formal waiver to the regulator and an application to the court on how to deal with outstanding client claims – in the ‘near future’.

The expected second and final distribution of 3p and 5p in the pound is significantly lower than the first payout of 50p.

‘This can only be an estimate at this stage, and the actual quantum and eventual timing of the final distribution will largely be dependent on the outcome of the FCA and court application processes and how long that process takes,’ the administrators noted.

Over the whole of the administration, which started on 9 March 2012, the special administrators Mazars has racked up fees of £6 million for 24,321 hours of work.

During the period between September 2016 and February 2017, total client claims of £200,000 have been returned, bringing the overall figure agreed and processed to £25.7 million across 6,339 clients.

In total, just over £12.8 million has been distributed by the special administrators. Meanwhile, the Financial Services Compensation Scheme (FSCS) has paid out a total of £9.3 million.

During the period, following discussions, the FCA expressed concerns in relation to clients with yet to be agreed claims above £50,000 – which is above the FSCS compensation limit. The regulator asked for further work to be done and agreement has been reached on several outstanding client claims.

The £3.1 million cash shortfall remains in place. Previously this was expected to increase due to one potential client claim exceeding £6.3 million. However, the administrators have said they will now deal with this issue in their application to court, but have stated that they do not consider it to have merit.

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