The Investor Compensation Company has reported a substantial number of insurance intermediary firms to the Central Bank for failing to contribute toward a compensation scheme to protect their clients.

Its annual report shows it has received just £304,087 (€386,387) of the £1 million it sought to collect from more than 5,500 investment intermediaries for the scheme initiated by the Investor Compensation Act.

The company was set up to provide compensation for investors who lose funds due to the collapse of an investment firm. The chairman, Mr Joe Maher, said he was disappointed with the number of firms which had failed to make a contribution and has referred the problem to the Central Bank.

The Bank has a range of powers to enforce the collection of these contributions including the suspension of firms from carrying on investment services for up to 12 months. "ICCL will pursue vigorously outstanding debtors in the interests of the scheme as a whole and also for the vast number of firms who have paid on time," Mr Maher said.

The £622,115 which remains to be collected excludes a provision of £100,000 made by the company for the cancellation of several tied agencies this year, mainly due to the small amount of investment business they write.

Under the Act, firms such as stockbrokers and authorised investment firms are obliged to make an annual contribution of £1,400 to £3,000 to the fund depending on the number of clients. Contribution rates for insurance and investment intermediaries are smaller - £125 to £200.

In its first year the fund invoice firms for contributions of £1.8 million and has received over £1 million. The company aims to build a fund of £8 million within five years from industry contributions.

"The board is closely monitoring developments and will take whatever financial decisions are necessary and within our powers to protect our funds in the interests of the investing public and the industry," Mr Maher said.

Some delay in collecting contributions from intermediaries was due to out-of-date information which led to difficulties in identifying the number of intermediaries which should be levied, he said. "I expect the position will be put right quickly with the co-operation of the regulatory bodies and appropriate insurance companies giving a reliable and up-to-date database of authorised intermediaries," he added.

The compensation payable to investors under a claim is equivalent to 90 per cent of the amount lost, subject to a maximum pay-out of €20,000 (£15,740).

The Investor Compensation Company can only begin making compensation payments to investors once it has been advised by the Central Bank that the firm is either the subject of a court ruling which prevents the return of moneys invested by clients or where the firm is unable to meet its obligations to investors.

The first claim lodged was from clients affected by the liquidation of MMI Stockbrokers last year. It has made a provision of £640,000 relating to claims and associated costs but the amount cannot be finalised ahead of a court ruling. The matter is due for mention before the High Court.