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September 25, 2023

FSCS ‘likely’ to cover losses for WealthTek clients

The Financial Services Compensation scheme has issued a new update regarding WealthTek LLP.

In the update published last week (September 14th) the FSCS says it ‘anticipates’ that it is ‘likely to meet any losses suffered’ by WealthTek clients, who are eligible under its rules.

It clarified that this was regarding losses in relation to the following:

  • the costs of returning client money to the customer and;
  • the costs of transferring any assets to a new broker – provided the particular assets are covered by FSCS’s rules.
  • client money shortfalls, that have occurred as a result of WealthTek not holding all the client money that it had undertaken to hold for that customer; and
  • client asset shortfalls that have occurred as a result of WealthTek not holding the client assets it had undertaken to hold for that customer.

The update also informed clients that prior to any compensation payment, the Joint Special Administrators’ Distribution Plan needed to be approved by the Clients’ and Creditors’ Committee and the Court.

The FSCS said: “We don’t yet have a timescale for how long it is likely to take to return money and assets to customers. The Joint Special Administrators will be providing more updates as their work progresses. We will continue to work closely with them and will provide further updates ourselves, including on timescales, when that information is available.”

In July the FSCS said it expected that there would be some claims that meet its qualifying conditions for compensation. And that it was continuing its investigations to “determine the exact extent of what can be covered’

According to the latest update the FSCS remain closed to customer claims.

Why did Wealth Tek go into Administration?

WealthTek LLP was a wealth management firm that provided discretionary, advisory and execution only services to retail clients.

In April 2023, The FCA ordered WealthTek LLP to “immediately cease carrying on all regulated activities’ after identifying serious regulatory and operational issues.

And following an application by the FCA, the Court appointed Special Administrators.

The regulator also froze the assets of WealthTek’s principal partner after discovering a potential shortfall of £81.4mn in client money.

The FSCS has been investigating WealthTek since April 2023.

Important Information!

You are not required to use our services to pursue your claim. You can also seek further advice or shop around subject to any time limits within which a claim must be made.

It is possible for you to present the claim for free, either to the firm or person against whom you wish to complain or to the statutory ombudsman (Financial Ombudsman Service or Pension Ombudsman Service) or the Financial Services Compensation Scheme, whichever is applicable to your claim.