Merchant House ‘unaware’ of £250,000 Pritchard loan

Merchant House Group claims it is not aware of a £250,000 unsecured loan to its former custodian Pritchard Stockbrokers which is listed in Prichard’s 2010-11 accounts.

Last month, the Financial Services Authority (FSA) suspended Pritchard’s regulatory permissions, saying the stockbroking firm failed to arrange adequate protection for clients’ assets and allowed client money to be used in Pritchard’s own accounts.

Pritchard’s accounts for the year to June 30 show an unsecured loan of £250,000 is owed to Merchant House Securities, a subsidiary of Merchant House Group.

A Merchant House Group spokesman says: “At no time has the company lent money to Pritchard Stockbrokers. No loan is in our audited accounts or accounted for anywhere else in our books.

“There was a plan for such a loan at one time but it was never made by Merchant House Group.” (article continues below)

Pritchard Stockbrokers refused to comment.

Merchant Capital is relaunching five of its structured product plans following the appointment of new custodian Reyker Securities.

The five plans, which have been withdrawn from the market ahead of the relaunch, include the FTSE Bull and Bear Issue 1, FTSE Bull and Bear Issue 2, FTSE EuroStoxx Issue 1, FTSE Euro-Stoxx Issue 2 and FTSE Issue 6.

A Merchant Capital spokesman says: “Given the time it will take to complete the formalities and all due diligence in relation to the appointment of the new custodian, Merchant Capital and Barclays have closed the current range and we will be issuing replacement plans shortly.”

Thomas Hughes, operations manager at StructuredProductReview.com, says: “’It will be a frustration for investors and IFAs who had intended to use these plans within their portfolios but their removal from the market is likely to be nothing more than an inconvenience.”