Square Mile Securities Limited has been declared 'in default', leaving other adviser firms to stump up the cash to pay for compensation claims.
The Financial Services Compensation Scheme (FSCS) says the firm is unlikely to be able to pay the costs of compensation, estimated at up to £15m.
However, those firms in the investment intermediaries sub-class (D2) will face higher FSCS levies to cover the bill.
Jonathan Clark, director of claims at the FSCS, says: "We recognise that this announcement brings more unwelcome news for firms in the investment intermediaries sub-class.
"We will be in a better position to clarify the potential costs once we start processing claims, and will keep the industry informed of developments and will provide more information as soon as we can."
So far, the FSCS has received 300 claims against the firm and has sent letters to a further 2,000 customers it believes are owed compensation.
The majority of claims will be processed within six months, at which point the FSCS hopes to provide further information on the final costs.
Contact: John Bakie, Tel: 020 7484 9805, e-mail: [email protected]
Have your say:
"Yet again the regulator fails to regulate and consumer and advisers pay the cost. When is the media going to highlight what the FSA has cost this nation. I am sick and fed up of the media not attacking the FSA for its out right failing to achieve sod all in 20 years, accept put in to place a bonus scheme to reward the staff for achieving nothing. They have made a simple fix so complex they themselves can no longer understans it, whilst they empire build to provide jobs for the boys. Why don't they take this out of the £33 mil bonus they intend to pay themselves?" Martin Evans Cert, IFA, PRISM Independent Financial AdvisersIFAonline
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