According to a short communique published on the website of the U.K. Financial Services Compensation Scheme (FCSC), clients of Alpari UK were sent an official message. The body which is responsible for insuring the clients of Financial Conduct Authority (FCA) regulated brokers has issued an apology for the delays.
The process of how the claims with the special administrators of Alpari UK will be aligned with the FSCS’s claims is still pending clarification. An official announcement about the matter is being planned for the end of the month. The communique states that KPMG is working closely with FSCS in order to determine the most efficient way to process the claims of Alpari UK clients.
Back in March, the FSCS reassured the clients of Alpari UK that they would be fully compensated for up to £50,000 of deposits at the brokerage. At the time, no detailed timeline was provided to the former customers of the bankrupt company.
The large number of clients affected by the bankruptcy of the broker is the primary reason for the delay. The special administrator appointed to the case, KPMG, had to setup a claims portal in order to facilitate the process.
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Three months after the event, clients of Alpari UK still haven’t received their insured deposits back from the FCSC.
In contrast to the bank deposit guaranteeing schemes around the globe which normally aim to repay clients of bankrupt institutions as soon as possible, the FSCS is acting under a different regulatory framework.
During the height of the financial crisis, the U.S. Federal Deposit Insurance Corporation (FDIC) has had to replenish its coffers on a number of occasions due to the high number of failing banks. At times, in 2009, the official reserves in the FDIC totaled below 0.3% of its total prospective liabilities which were close to $5 trillion.
In a recent bankruptcy case of a Bulgarian commercial bank, insured depositors of Corporate Trading Bank had to wait for more than 5 months before receiving their funds back.
The deposit insurance schemes in the U.K. should hardly be pleased with comparisons to similar organizations in the periphery of the European Union. If the FSCS can do anything to reassure clients of Alpari UK, it is to be fully transparent with more publicly available information.