New Merchant Capital custodian Reyker Securities has angered clients by telling them they need to pay a fee in order to receive their delayed income payments and have it act as custodian.
Assets and cash worth approximately £350m have been transferred from Pritchard to Reyker.
Fundweb.co.uk’s sister title Money Marketing revealed at the same time that an undisclosed number of investors were yet to receive income payments owed to them.
Reyker has now written to clients saying that in order to receive income payments and have it act as custodian they will need to pay an admin fee of £15 per investment before April 13.
If the letter of agreement is received between April 13 and April 23 the charge will increase to £20 per plan, going up to £25 per investment for clients who respond after April 23.
The letter from Reyker, sent out as part of an information pack and seen by Money Marketing, says: “Whilst Reyker is striving to be part of the solution to the problems caused by the suspension and subsequent administration of Pritchard, we are a commercial financial institution and this means that we need to charge fees for the services we provide to cover the costs that we incur with third parties, such as exchanges, regulators and banks.”
Reyker says the admin cost covers the cost of writing to clients, any follow–ups, inputting data, the cost of taking assets into custody and providing a portfolio valuation.
Parent firm Merchant House Group temporarily suspended its shares on the Alternative Investment Market this morning pending an announcement from the company.
Stuart Burkin, director of Adler Financial Planning, received a call from a client yesterday after she received the letter from Reyker Securities.
He says: “I imagined when I heard about this there must have been some mistake. Surely Reyker were not expecting the client to pick up the fee? But clearly they are. It is crazy.”
Ian Lowes, managing director of Lowes Financial Management, says: “This is an unfortunate situation brought about through no real fault of Merchant. Obviously a new custodian needed to be appointed and Merchant acted quickly to do so.
“We appreciate that Reyker need to be paid but we are surprised that investors are being asked to foot the bill. Whilst we have been assured by Merchant that this was following extensive consultation with the FSA this does not make it any the more palatable.”
Merchant House Group was unavailable for comment.