Most claimants in Custom House Capital failure awaiting compensation

No claims were certified in the past financial year as ICCL awaits legal action

The ICCL provides a level of protection for retail clients of Irish-regulated investment firms. Photograph: Alan Betson

The ICCL provides a level of protection for retail clients of Irish-regulated investment firms. Photograph: Alan Betson

 

The majority of potential claimants in the case of Custom House Capital (CHC) are yet to receive compensation, some eight years after the broker was found to have misappropriated about €66.5 million from customers.

According to the Investor Compensation Company (ICCL)’s annual report published on Wednesday, the State’s investor compensation fund didn’t certify any claims in the 12 months to July 31st, 2019, with 1,370 claims awaiting validation by the liquidator.

The liquidator is continuing the process of recovering funds that had been misappropriated from pooled client accounts and a large amount have been reconciled, the report says.

However, the ICCL’s claim over the compensation paid to eligible clients of CHC has been challenged by the liquidator and an initial hearing on the matter will be held on Thursday in the High Court.

The ICCL provides a level of protection for retail clients of Irish-regulated investment firms. It pays up to 90 per cent of the amount lost, subject to a maximum of €20,000, to each investor, and is funded by levies from its members. The collapse of CHC, has turned out to be the single largest compensation event to date for the ICCL.

Total investor losses at CHC are estimated by the liquidator at more than €61 million with compensatable losses of up to €19.7 million. To date, just over €7.4 million has been paid on foot of the certification of 574 claims.

‘Considerable frustration’

ICCL chairwoman Jane Marshall said the “protracted delays in the certification of claims in CHC and related payment of compensation to eligible clients remains a source of considerable frustration”. She added that the organisation hoped its claim will enable progress to be made.

Separately, the ICCL has seen an influx from the UK of new companies to the scheme resulting from Brexit considerations.

That helped it record a €4.3 million surplus in the year, a €214,000 drop on the previous year. At the year end, accumulated reserves of the company stood at €61.6 million. That has risen to €67 million since the financial year end with the company’s contributor base standing at 3,272.

The company’s involvement in the liquidation of the Irish Banking Resolution Corporation was completed during the year while no further claims are expected in the case of the administration of Asset Management Trust, which had its accounts frozen in 2014 after some clients raised concerns about the valuation of investments.

The liquidation of Money Markets International Stockbrokers Limited, dating from March 1999, is ongoing and resolution is “awaited”.