Compensation for just one in eight Custom House clients
Investor despair at scheme's slow pace
Only one in eight investors in Custom House Capital (CHC), the Dublin investment firm which collapsed two years ago, has got any compensation from the State-run investor compensation scheme.
CHC imploded in October 2011 after High Court inspectors uncovered the "systematic and deliberate misuse" of more than €56m of assets and cash belonging to clients of the firm. Around the time of its collapse, a High Court judge described CHC as "a sort of Irish Ponzi scheme".
So far, 1,963 investors in CHC have applied to the Investor Compensation Company Limited (ICCL) for compensation. Only 234 of these have received compensation from the ICCL so far – and 26 have had their claims rejected.
The ICCL pays up to €20,000 in compensation to investors in firms which go bust – as long as the investment is covered by the ICCL's compensation scheme.
However, not all investments sold by CHC are covered by the ICCL's investor compensation scheme and many of CHC's customers invested a lot more than €20,000 in the firm. In some cases, individuals invested millions of euro in products sold by the company.
"Any claim that has been made will be dealt with in due course but it will take time," said George Treacy, chief operations officer with the ICCL.
The CHC's administrator must identify clients that are eligible for recompense before ICCL can make awards.
The Central Bank says it expects to recover a substantial amount of the €56m of client money misused by the firm, so investors could get their money back – in addition to compensation from the ICCL. However, many investors have not yet heard if they have any chance of getting their money back.
One retired investor who spoke to this paper last week said he had invested €139,000 in various investments sold by CHC, including property funds and a PRSA cash fund.
"This was meant to provide a pension for me and my wife in retirement," said the investor, who did not wish to be named. "I've got none of that money back and haven't been given much hope that I will ever see any of it again. I now have to depend on the state pension."
The wealth management firm, Crowe Horwarth, has organised a number of investor briefings over the next few months to help former clients of CHC to get an update on their investments. Two of these investor briefings – for investors in a couple of CHC property funds – took place last week.