New legislation may be required to ensure investors are compensated in a reasonable period of time when big investment firms go under, the Investor Compensation Company, set up to protect investors, has said.
Chief operating officer Michael Fagan said lessons had to be learned from the 2011 collapse of Custom House Capital, where the “lion’s share” of investors were still awaiting compensation.
With 500 Custom House Capital investors dealt with, the Investor Compensation Company faces delays paying 1,500 more Custom House Capital investors because of complications in dealing with the liquidator of the failed investment firm because of the pooled nature of the funds.
The compensation bill for Custom House Capital will likely reach €20m, of which €8m has paid out.
In its annual report, the Investor Compensation Company, which is funded by levies on the financial services industry, said it had added to its reserves which now were worth €48m after the fund was devastated in recent years following major collapses of Custom House Capital and W&R Morrogh.
W&R Morrogh clients were paid €7.8m in compensation.
Jim Bardon, chair of the Investor Compensation Company, said in the report it may seek further legislative changes.
“In consequence, the board has initiated an assessment of all aspects of the current claims process, as well as the lessons learned from [Custom House Capital] and other cases with a view to recommending changes to the compensation regime, including possible legislative amendments which would improve the outcome for eligible clients in future investment firm failures,” said Mr Bardon.
© Irish Examiner Ltd. All rights reserved