Friday 23 June 2017

Most Custom House Capital investors yet to get payouts

Around the time of its fall, a High Court judge described Custom House as
Around the time of its fall, a High Court judge described Custom House as "a sort of Irish Ponzi scheme"
Charlie Weston

Charlie Weston

THE majority of people who lost money in the collapse of investment firm Custom House Capital have yet to receive any compensation.

Five years after the collapse of Custom House Capital, just 553 claims have resulted in a pay-out.

This is out of a total of close to 2,000 claims made to the Investor Compensation Fund.

The compensation fund was set up by legislation and is funded by levies on investment firms and brokers.

Around €20m is expected to be paid out to those who lost money after Custom House Capital imploded in October 2011.

The collapse came 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 fall, a High Court judge described Custom House as "a sort of Irish Ponzi scheme".

An absence of proper books and records has meant that liquidator and administrator Kieran Wallace has been unable to certify claims to allow them to be paid by the fund, according to compensation fund chairman Jim Bardon.

The Investor Compensation Fund pays up to €20,000 in compensation to investors in firms which go bust - as long as the firm is authorised and the investment itself is covered by the redress scheme.

However, it can take years to get compensation under the scheme.

Just €7m has been paid out so far to those who lost funds through the blow up of Custom House Capital, according to the annual report of the investor compensation scheme.

Mr Bardon said there were no new failures of investment firms this year.

But he added: "Unfortunately, progress in relation to our main ongoing case, Custom House Capital, continues to be extremely slow.

"It is a matter of considerable frustration/regret that the certification of claims by the administrator in this case has proven to be such a protracted exercise, hampered by deficiencies in the firm's books and records in the aftermath of the serious misappropriation of client funds perpetrated," he said.

Mr Bardon said no claims were certified, and no claims paid, in the year up to July. But certifications have resumed in recent months.

Most outstanding claims involve pooled client accounts where "very significant misappropriation occurred", the Investor Compensation Fund said in a statement.

Custom House Capital is the largest case the compensation fund has dealt with since it was set up.

Two years after administrators were appointed to Irish Bank Resolution Corporation, which was Anglo Irish Bank, all claims have been certified.

The fund recorded a surplus of €4.5m for the year up to July, and had reserves of €43.3m.

The reserves have been replenished after being run down in recent years, Mr Bardon said.

Irish Independent

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