The scheme compensating investors for losses arising from the closure of investment firms is facing a major review

The study of the Investor Compensation Company Limited (ICCL) will examine current funding arrangements, funding structure, contribution rates and compensation arrangements.

The ICCL is seeking submissions from consumer and financial industry groups along with other interested parties.

The body's funding has come under strain from the scale of the payout to former clients of W&R Morrogh, the Cork stockbroking firm that collapsed two years ago.

However, Ms Patricia Fitzgerald, chief operations officer of the ICCL, denied that the review was prompted by the Morrogh case. "The scheme has been in operation for five years and there was always the intention to review it," Ms Fitzgerald said.

The compensation scheme has already paid out €2.2 million to former Morrogh clients and expects to pay out a further €3 million to the 2,500 investors who applied for compensation.

The largest payout previous to the Morrogh case involved just 300 clients of MMI Stockbrokers.

The ICCL's last annual report reported a deficit of more than €141,700 in one of its two reparation fund accounts.

This fund, known as Fund A, is supported by contributions from stockbroking firms, investment firms and banks providing investment services. These firms and institutions were asked to make top-up contributions to the scheme over three years to cover the cost of the Morrogh claims.

Ms Fitzgerald said the fund was now back in surplus.

The maximum level of compensation available is €20,000 or 90 per cent of the investor's losses, whichever is the lesser. However, Morrogh clients were required to have a minimum of €63,500 for the firm to manage their portfolio.

As there are insufficient assets in the firm to meet the claims, these investors are unlikely to be compensated for all of their losses.