Beaufort Securities Limited ("BSL") in Administration & Beaufort Asset Clearing Services Limited ("BACSL") - in Special Administration ("the Firms") - Client – Frequently Asked Questions

Initial communications

 

Frequently Asked Questions - updated 13 December 2019

Client account specific

Questions

Answers

I believe I held an account with BACSL, but I don’t know my Client ID. How can I check to see if I do hold an account?

If you believe you held an account with BACSL, please call our helpdesk to speak to a member of our team from 9am until 5pm Monday to Friday excluding public holidays. After taking you through the necessary security procedures, they will be able to confirm whether or not you held an active account with BACSL at the time of the insolvency.

The majority of clients should have been sent a link to the Client Portal. If you have not been communicated to, please access the Client Portal or please contact the Administration help desk.

How can I confirm the contact details you hold for me are correct?

Please contact our helpdesk in order to confirm the contact details we currently hold for you. We are able to update your address, email address and bank account details as required after taking you through the necessary security and identity checking procedures.

The majority of clients should have been sent a link to the Client Portal. If you have not been communicated to, please access the Client Portal or please contact the Administration help desk.

Why have I been sent a letter detailing my remaining cash and/or Client Asset balances when my account has been transferred in the previous bulk transfers to The Share Centre or AFH Private Wealth or to my own selected broker?

The letter details any remaining cash and/or Client Assets on your account which we have been unable to transfer to one of the Administrators’ nominated brokers in the previous transfers due to restrictions placed by the nominated brokers. Additionally, there have been instances where your own selected broker has not accepted certain holdings.

All clients who still hold money balances and/or assets with BACSL have been sent the letters to seek engagement and instruction to facilitate a return.

My assets were not transferred in the previous bulk transfers to The Share Centre or AFH Private Wealth or to my own selected broker, what are my options?

We have been unable to transfer certain holdings to one of the Administrators’ nominated brokers in the previous transfers due to restrictions placed by the nominated brokers. There have also been instances where your own selected broker has not accepted certain holdings. There are currently four options available to you under the Distribution Plan regarding your assets:

  1. It may be possible for you to arrange a transfer of such Client Assets to a new broker of your choice. For more information on initiating a transfer of Client Assets to your own selected broker, please access the summary process for distribution of client assets.
  2. It may be possible to materialise your holding, register the physical certificate into your own name and return this to you. As previously mentioned, please note that the costs associated with taking this approach may be considered disproportionate to the realisable value of the assets and therefore you may need to pay them.
  3. If any of your Client Assets are still trading in the market, it may be possible for us to arrange for the asset to be liquidated through a third-party broker. For full details of how to initiate the liquidation of Client Assets held on your account, please access the process for liquidation of assets.
  4. Under the terms of the Distribution Plan you are able to abandon your right to Client Assets and / or Client Money balances. Please see below for how you can abandon your portfolio.

What happens to my assets if the company is dissolved?

If following our investigations, companies have been identified as or are believed to be dissolved, your related holdings will have been (or will be) removed from your account.

You can check if the underlying company is dissolved on the list of dissolved/Illiquid socks and warrants.

If you believe you were mis sold these assets, then please contact the FSCS directly and submit a claim directly via its on-line portal.

What happens to my assets if they are categorised as disabled?

An asset is deemed disabled where the asset is held in electronic form with a custodian, but the asset is not transferable. Assets can be disabled for a number of reasons, such as the registrar or company have requested this, the company itself is not trading and/or is in an insolvency procedure. As a result, it is not possible to liquidate/sell, or transfer these assets. In limited circumstances it may be possible to withdraw these into physical form.

If you believe you were mis sold these assets, then please contact the FSCS directly and submit a claim directly via its on-line portal.

I held a physical asset with BACSL, what is the process to get this re-registered?

BACSL have been contacting the registrars of all physical certificates in order to understand what information they require to re-register the physical assets into the clients’ own names.

We continue to liaise with the appropriate third parties to facilitate the re-registration process.

Please note, in certain circumstances the costs associated with taking this approach may be considered disproportionate to the realisable value of the assets and therefore you may need to pay them.

I no longer wish to hold my asset(s) and / or cash balances.

If you wish to abandon a Client Asset, please respond to us in writing (via email or letter) using the wording below, replacing the elements within square brackets with your specific details to confirm the abandonment of the Client Asset.

Please note that by sending us your written confirmation to abandon your Client Asset, you acknowledge that BACSL shall accordingly be beneficially entitled to this asset (and in due course any proceeds realised in respect of this asset)  and, where applicable, that you have no further claims against the FSCS in respect of the value of this asset, without prejudice to any claims that you may have against BSL in respect of the circumstances in which you came to hold the assets.

Wording for abandoning Client Assets:

“I, [INSERT YOUR NAME], confirm that I fully and finally abandon any proprietary rights I have in respect of [QUANTITY] shares in [NAME OF STOCK] held in my account with Beaufort Asset Clearing Services Limited (“BACSL”). I irrevocably release and discharge BACSL and the Administrators from any and all claims in respect of such assets and/or their value.”

Wording for abandoning cash:

“I, [INSERT YOUR NAME], confirm that I wish to abandon any balance I have in respect of Client Money held in my account with Beaufort Asset Clearing Services Limited (“BACSL”). I irrevocably release and discharge BACSL and the Administrators from any and all claims in respect of such Client Money.”

What happens if my Client Assets and/or Client Money are not transferred by the time the Administration closes?

PLEASE NOTE THAT IT MAY BE SIGNIFICANTLY HARDER FOR YOU TO RECOVER YOUR ASSETS ONCE THE ADMINISTRATION CLOSES. IF YOU HAVE NOT ALREADY DONE SO, PLEASE ENGAGE WITH US AS SOON AS POSSIBLE.

The Administrators may seek to bring the Distribution Plan to an end by serving a Long Stop Date Notice - the Long Stop Date will be two months after the date upon which a Long Stop Date Notice is sent.

Under the Distribution Plan, once the Long Stop Date has passed, the Administrators are entitled to liquidate the remaining Client Assets on clients’ accounts (where possible) and are released from their obligations in relation to certain Client Assets that cannot be liquidated (for example, Tainted Client Assets).

The Distribution Plan empowers the administrators to send the Long Stop Date Notice once they have determined (acting reasonably) that they have achieved Objective 1 to the extent reasonably practicable.

Although no application is strictly required to do so, in light of the challenges faced in returning certain Client Assets, the administrators consider that it is appropriate to seek leave from the Court to trigger this mechanism, bringing the Distribution Plan to a close. The Administrators are currently targeting seeking leave by the end of Q1 2020.

I held a joint account with my partner through BACSL. Are we able to claim for any losses through the FSCS individually or are we limited to claiming up to £50,000 in total between us?

The FSCS states that the maximum level of compensation for claims is £50,000 per person per firm. Therefore, as joint account holders you and your partner would be entitled to make separate claims for up to £50,000 each as individuals. You can check the FSCS Website for further information about what is covered. We are currently liaising with them and further guidance will be available in due course.

Will I suffer a shortfall?

Where BACSL does not hold enough of a Client Asset for all clients entitled to that particular Client Asset, this is known as a “shortfall”.

The shortfall in any asset has been allocated across all clients holding that particular asset in proportion to clients’ entitlements to that particular asset.

Fortunately, only a relatively small number of clients are affected, with the shortfalls occurring across 25 different assets.

Shortfalls have been covered by the Financial Services Compensation Scheme (“FSCS”) where clients are eligible; the FSCS provide compensation for amounts up to £50,000 across Client Money and Client Assets taken together, including your share of certain costs.

We have worked with the FSCS to value the shortfalls as at 1 March 2018 and eligible clients were compensated accordingly during May 2019.

Details of the 25 assets affected by shortfalls, including the valuations of these assets as at 1 March 2018 can be found on the Client Asset Shortfall Valuations.

The unit price quoted in this document can be used to calculate the compensation paid to eligible clients (e.g. unit price of asset as at 1 March 2018 x number of units shortfall = compensation due).

If you have been transferred to a nominated broker your compensation has now been transferred across to your account with your new broker. If you transferred to a broker of your own choosing, the compensation will be transferred to your new broker in the next scheduled cash sweep.

If your assets/cash remain with BACSL, you will need to contact our Administration Helpdesk to advise how you wish to proceed.

Am I entitled to compensation?  

The Administrators have worked closely with the FSCS and have confirmed that, where eligible, clients that have Client Money and assets held with BACSL with a shortfall of up to a value of £50,000, such clients will have their shortfalls made good by the FSCS.

The FSCS states that the maximum level of compensation for claims is £50,000 per person per firm. You can check the FSCS Website for further information about what is covered.

How will Client Assets be returned?

The Administrators have been returning Client Money and Client Assets to clients since September 2018 in accordance with the Client Money distribution rules and the Distribution Plan.

If you have not yet had your assets returned to you, please contact our Administration help desk immediately.

Further information can be found on the Distributions page of this website.

I have been approached by a third party.

As outlined in our press release published on 15 August 2018, the Special Administrators have previously notified clients of individuals approaching BACSL clients claiming to be representatives of PwC, The Share Centre, AFH Private Wealth or other third parties involved in the administration. These individuals are fraudulently requesting money in order for clients’ holdings to be transferred. These individuals are not acting on behalf of the administrators or the nominated brokers and we strongly advise clients to disregard any requests of this nature.

The Special Administrators would like to remind clients that no information has been shared with third parties with the authority of the administrators and any such callers are not acting on behalf of the administration.

FCA guidelines are available on the from the FCS and if clients have lost money in the scam, they should contact Action Fraud on 0300 123 2040 or www.actionfraud.police.uk.

Administration specific

Questions

Answers

What is an Administration?

An administration is an insolvency procedure where individual insolvency practitioners take charge of the company’s business and affairs with a view to pursuing certain objectives; in this instance, to oversee the orderly return of Client Assets and money.

What is the Special Administration Regime (SAR)?

The SAR, introduced by the government in 2011, helps sort out situations where investment firms, which hold clients’ money and/or assets under the FCA’s CASS rules, fail. The SAR process has several objectives, but one of these is to ensure clients’ money and assets are returned to clients as soon as is reasonably practicable.

What happened exactly and why was it required?

An Own Initiative Requirement (OIREQ) was imposed by the FCA to prevent the Firms’ clients from being exposed to further harm and protect the integrity of the UK financial system due to:

  • the FCA’s consideration that the Firms are failing to satisfy the FCA’s threshold conditions of Appropriate resources, Suitability and Effective Supervision; and
  • the DOJ’s formal accusation of BSL on 1 March 2018.

An OIREQ was imposed on both firms requiring them to cease all regulated activities and freezing their assets and any Client Assets held.

What is the difference between BSL and BACSL?

As a client making investments with Beaufort all client correspondence will have been branded as Beaufort Securities Limited (“BSL”). Beaufort Asset Clearing Services Limited (“BACSL”) provide the clearing and custody services to Beaufort Securities Limited. All Client Money and Client Assets were therefore held with Beaufort Asset Clearing Services Limited.

Were Client Assets ring-fenced from company assets?

The administrators have secured both Client Money and Client Assets and the process of distributing assets to clients in line with the Court approved Distribution Plan commenced from 24 September 2018.

If your Client Assets/Client Money remain with BACSL, please contact us on 0800 063 9283 (UK) or +44 (0)20 7293 0227 (Internationally) or at client.services@beaufortsecurities.com.

Why are costs being deducted from Client Assets?

There are insufficient resources in the Firms to pay for the costs of returning assets to clients. Therefore, these costs will need to be deducted from clients’ portfolios in accordance with Rule 135 of the Investment Bank Special Administration (England and Wales) Rules 2011.

The administrators continue to work closely with the FCA and FSCS to facilitate the return of Clients’ Assets and/or Money balances however, this has costs associated with it. Those costs are not just in respect of their own fees, but also in respect of operational costs and legal advisors’ fees. The administrators have materially reduced the scale of the Firms’ operations, maintaining all and only critical operations in order to facilitate the return of Client Money and Client Assets.

Have HMRC been notified about the situation?

 

Yes. BACSL ceased to qualify as an ISA Manager effective from 1st March 2018. Ordinarily, individual ISA account holders would be required to transfer their account to another ISA manager within 30 days to preserve the ISA status of their assets. However, having regard to BACSL’s special administration, HMRC have agreed to relax such a deadline in order to preserve ISA status. You therefore do not need to take any action at this time.

Pre-administration mis-selling complaints against BSL

 

 

As far as FSCS is concerned, there is a separate £50,000 limit for advice claims (which relates to BSL) and £50,000 for Client Money and/or Client Asset losses (which relates to BACSL).

Therefore, if you are owed compensation from a FOS award, you can claim up to £50,000 from the FSCS (relating to BSL).

If you suffer a shortfall in the assets returned to you from any portfolios you held with BACSL, you can claim up to £50,000 from the FSCS (relating to BACSL).

Any outstanding Financial Ombudsman Services (“FOS”) complaints against BSL for mis-selling have been passed to the FSCS, where consent has been granted.

The FSCS will then assess and pay compensation up to the £50,000 limit. FSCS will then make a claim on BSL’s Professional Indemnity insurance. If the FSCS makes a recovery in relation to a client whose loss was not fully covered by the FSCS compensation, then FSCS will pass that recovery over to the client.

When will the Administration close?

The administrators have been working closely with the FSCS and the brokers nominated under the Distribution Plan (The Share Centre and AFH Private Wealth) on the steps needed for the transfer of clients’ accounts.

To date, over 97% of clients have been transferred to the Nominated Brokers and / or own selected brokers.

As the administration draws to a close, it is anticipated that the administrators will seek leave from the Court that Objective 1 has been achieved to the extent reasonably practicable. Timing will be subject to the availability of the Court to hear the application, however, the administrators are hopeful that this and the necessary closure steps will take place by the end of Q2 2020.

What if I wish to contact BSL's Professional Indemnity Insurer about my claim?

We are aware of claims asserted by clients against BSL for compensation in respect of various matters, including poor investment advice. Clients of BSL who believe they have such a claim can submit it to the FSCS via its on-line portal.

FSCS compensation is subject to eligibility and is capped at £50,000 per Client.

Alternatively, Clients may wish to seek recovery (pursuant to the Third Party Rights Against Insurers Act 2010) from BSL’s Professional Indemnity Insurer, the details of which are provided below:

Insurer : PartnerRe Ireland Insurance DAC
Type : Civil Liability & Directors and Officers Liability policy
Policy Number : FH1703759/FH1601921
Address : c/o Nexus Underwriting Ltd, 52-56 Leadenhall Street, London EC3A 2EB

However, the FSCS will not be able to consider a claim for compensation from a Client who is also pursuing their own claim direct with BSL’s insurer.

Can I speak to the person in charge?

The administrators are unable to answer individual client queries.

In the first instance, you should contact our Administration Helpdesk

Regular updates are posted on our website.

These FAQs have been prepared for information purposes only and are subject to change without notice.  They are not intended to create, alter or amend any further rights or existing rights between clients and BSL or BACSL.

Russell Downs, Douglas Nigel Rackham, and Dan Yoram Schwarzmann have been appointed as joint administrators by the High Court to manage the affairs, business and property of Beaufort Securities Limited. Russell Downs, Douglas Nigel Rackham, and Dan Yoram Schwarzmann have been appointed as joint special administrators by the High Court to manage the affairs, business and property of Beaufort Asset Clearing Services Limited. The ​administrators and ​special administrators (together the "Administrators") act as agents of the companies, without personal liability. All are licensed in the United Kingdom to act as Insolvency Practitioners by the Institute of Chartered Accountants in England and Wales. They are bound by the Insolvency Code of Ethics which can be found at: https://www.gov.uk/government/publications/insolvency-practitioner-code-of-ethics.

The ​Administrators may act as Data Controllers of personal data as defined by UK data protection law depending upon the specific processing activities undertaken. PricewaterhouseCoopers LLP may act as a processor on their instructions. Personal data will be kept secure and processed only for matters relating to the Administrators' appointment. Further details are available in the privacy statement on the PwC.co.uk website or by contacting the Administrators.

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