The State's investor compensation fund has returned €7.4 million to former clients of Custom House Capital (CHC), the collapsed broker found to have misappropriated €66.5 million from customers.
Over the 12 months to July 31st, the Investor Compensation Company (ICCL), returned €387,000 to former CHC clients on foot of 20 claims certified by the defunct broker's liquidator, Kieran Wallace of accountants KPMG.
According to the compensation company’s annual report, published on Thursday, it has paid a total of €7.399 million on 467 claims from former CHC investors since the firm was wound up 2011.
ICCL expects claims for a further €12.3 million from the broker’s clients, and has already set aside the cash to meet this.
The company compensates clients where investment firms fail because of fraud or other wrongdoing. It offers them 90 per cent of the full amount invested or €20,000, whichever is the lower.
The compensation fund's chairman, Jim Bardon, said progress in the CHC case continued to be slow. He noted that Mr Wallace told the High Court in his latest report that he hoped to complete most of his work in 18 months and would certify ICCL claims alongside that.
“I can assure the CHC investors involved that the company remains committed to seeking the acceleration of the claims process and that on receipt of certifications, the ICCL will arrange for payment of compensation promptly,” he said.
New measures
Mr Bardon acknowledged that dealing with CHC was complex, but argued that his organisation believed that new measures are needed to tackle problems that slow the resolution of such cases.
ICCL's chief operations officer, Michael Fagan, suggested that a system similar to the deposit guarantee scheme for banks and credit unions would work for investors' compensation. The Central Bank administers this scheme, which pays account holders promptly.
Investment firms pay levies to the ICCL, which means that it has the cash needed to pay clients in the event of a collapse. According to its annual report, it has €52.8 million in reserve for future cases.
Mr Wallace is working on recovering cash misappropriated by CHC and redistributing clients’ assets. He told the High Court earlier this year that around €130 million could ultimately be returned to clients.
CHC was liquidated in 2011 after a High Court-ordered investigation found “systemic and deliberate misuse” of clients’ money, most of which was wrongly transferred to property investments.
The court banned executives Harry Cassidy and John Whyte, and non-executive John Mulholland, from acting as company directors for long periods.
CHC was the only case on which the ICCL made payments during the 12 months to July 31st, the period covered in its annual report. It is working on the much smaller Asset Management Trust Ltd case and will have paid €77,000 to clients by the end of this year.
