Compensation claims relating to IBRC failure not expected to exceed €2.6 million

Claims relating to the failure of

IBRC are not expected to exceed €2.6 million, the State’s investor compensation fund has said.

Investor Compensation Company Limited, the independently run fund for out-of-pocket investors in failed regulated entities, said it has put aside €2.6 million for compensation claims relating to the failure of IBRC.

"The joint administrators have estimated that the cost to the ICCL of the failure of IBRC is expected to fall within a range of €0 to €2.6 million," the ICCL said. In its annual report, the ICCL said it had paid out claims totalling €5.9 million to investors who lost out in the failure of Dublin firm Custom House Capital.

Compensation fund
However, the compensation fund said the process of certifying and paying out claims relating to Custom House Capital had been "protracted" and "slow" due to "concern over the accuracy of records" and "questionable documentation" within the investment firm.

Custom House Capital was wound up in 2011 after a High Court-appointed investigation by two Central Bank inspectors into the firm found the “systemic and deliberate misuse” of €66 million of clients’ money to cover shortfalls in European property investments. The inquiry found “improper transactions” concerning €56 million in client funds and a further €10.4 million owing to clients on an investment bond.

ICCL said a total of 1,966 claims had been received in relation to the collapse of the investment firm, and as of the end of September, it had paid out €5,941,490 in compensation in relation to 405 claims.

In the case of Bloxham Stockbrokers, the ICCL said the administrator had decided no compensation was due to claimants. A total of 27 claims were received, but all were rejected.

The latest accounts for ICCL show it had cash reserves of almost €44.5 million on July 31st, 2013, and a standby credit facility of €50 million. The company said its operational costs for the year fell from €1.47 million in 2012 to €1.32 million this year.

"This [the IBRC] failure, along with the Custom House Capital and Bloxham failures, occurred following a period of 10 years free from failure. Throughout those 10 years, the company had consistently built reserves and put in place alternative funding arrangements to meet the liabilities that arise from the payment of compensation to eligible investors," ICCL said. Since it was established in 1998, ICCL has also dealt with claims arising from three failed firms, Andrew Casey Life & Pensions, Money Market International stockbrokers and W&R Morrogh stockbrokers.

Collapse
ICCL said all claims relating to the collapse of Cork stockbroker W&R Morrogh in 2001 have been certified, with some €7.8 million in compensation paid out in respect of 2,634 claims.

It said all claims relating to the Andrew Casey and Money Market International cases have also been processed.