Former clients of BFS Investments can claim up to £48,000 in compensation for losses incurred in the split-cap scandal, the Financial Services Compensation Scheme (FSCS) has announced.
BFS, which ran £250m in five investment trusts, was investigated by the Financial Services Authority (FSA) after it became embroiled in the scandal.
Split-cap investors suffered heavy losses after the technology bubble collapsed at the end of 2000. As Fund Strategy reported on May 29, the FSA resolved and discontinued its investigation of BFS without taking disciplinary action. However, as part of the deal, the firm’s chief executive officer, Anthony Reid, agreed not to perform any controlled functions until October 3, 2009.
BFS sold its investment trust and private client businesses to Premier Asset Management in October 2005. Premier assumed responsibility for their management and also took on a number of BFS employees before BFS went into voluntary liquidation in February last year.
However, it was not until last week that the FSCS was finally able to declare BFS in default, allowing compensation to be paid. The scheme sent questionnaires to 4,200 BFS investors in August and will send further letters to investors named by the liquidator.
Further information is available on the FSCS website at www.fscs.org.uk. Investors can also phone the scheme on 020 7892 7300.
The FSCS expects to deal with claims relating to the trusts managed by BFS, its role in marketing the trusts and its role in holding investments unsuitable for its clients’ risk levels. The scheme does not expect that it will need to raise extra capital to fund the costs of BFS claims.