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FSCS confirms Wills & Co costs to fall on IFAs
15 September 2010
The Financial Services Compensation Scheme (FSCS) has confirmed that the cost of compensating clients of failed stockbroker Wills & Co will fall on wealth managers and advisers. The FSCS has placed Wills & Co into its investment intermediation sub-class, meaning IFAs will contribute to the cost of compensating the 1,400 consumers who have complained about the stockbroker. Wills & Co is the third brokerage in recent years to go into default following Pacific Continental Securities (PCS) and Square Mile Securities (SMS). The FSCS faces a judicial review over the classification of PCS, SMS and Keydata Investment Services as investment intermediaries, sparking a £80 million interim levy on advisers after law firm Regulatory Legal protested against the decision. The Financial Services Authority (FSA) fined Wills & Co £49,000 in October 2007 then censured it in February 2010 and banned the stockbroker from giving further investment advice to its 19,000 clients. Wills & Co was declared in default in July after the FSA found it was unable to pay claims to its customers. The FSA withdrew a petition for the business to be wound up in August in favour of a company voluntary arrangement. The FSCS said it could not determine what would the total cost of Wills & Co going into default for the investment intermediation sub-class. It has however already paid out £650,000 in compensation to 80 former customers of Wills & Co and has received another 1,400 claims. Published by CityWire
