The special administrators of SVS Securities today posted a progress report for the period from 5 February 2021 to 4 August 2021.

The Administrators confirm that, other than a very small number of exceptions, the full Custody Asset and Client Money entitlements of Clients have been or are expected to be returned in accordance with the Regulations. For the vast majority of Clients, their Custody Assets and Client Money have been returned in accordance with the Regulations by way of transfer to ITI on the Transfer Date.

The very small number of exceptions for whom the full entitlement of Custody Assets or Client Money will not be returned relate to Clients who are not FSCS eligible (less than 1% of the total Clients).

The legislation governing the special administration regime provides that the costs of returning custody assets are to be paid out of the custody assets. In respect of client money, the legislation requires the costs of returning client money to be deducted in a manner that results in every client having its entitlement to client money reduced by the same percentage. This means that the costs of returning Custody Assets and/or Client Money are ultimately borne by the company’s clients.

At this stage, the overall costs of returning Custody Assets and Client Money are still to be determined. In accordance with the Distribution Plan, the costs will be a fixed, capped cost per client for Custody Assets and a percentage of Client Money.

In connection with the Distribution Plan, an initial cost reserve needed to be set for the costs of the Special Administration of the company which are deductible from the Custody Asset and Client Money, which was set using a conservative estimated budget of £44.5 million.

As advised to Clients previously, this figure is expected to be subject to reductions and rebates in due course as greater certainty as to the ultimate level of costs is achieved. It is also subject to assessment by an independent fee assessor appointed by the Creditors’ Committee.

Based on current information, the anticipated total costs of the Administration are expected to be in the region of £29.6 million to £31 million.

Although the costs of returning Custody Assets and Client Money are notionally borne by the company’s clients, the vast majority of the company’s clients are eligible for FSCS compensation, and so those costs will be, or have been, effectively paid by the FSCS. This enables the return of the full entitlement to Custody Assets and Client Money of Clients (other than a few corporate clients not eligible for FSCS compensation and one individual client with a large Client Money claim whose losses exceed the FSCS’ compensation limit of £85,000 per claimant).

However, at this stage, the Administrators do not anticipate that there will be sufficient House Asset realisations, after costs, to enable a dividend to be declared to preferential or unsecured creditors.

Let’s recall that SVS Securities plc was placed in Special Administration by its directors in August 2019. Andrew Duncan, Andrew Poxon and Alex Cadwallader, of Leonard Curtis Recovery Ltd were appointed Special Administrators of SVS.

SVS Securities plc is a wealth management firm that offers a range of services to its clients, including advisory stockbroking, online share dealing, Forex trading and discretionary fund management services.

The directors of SVS decided to place the firm in Special Administration. This was following action taken by the Financial Conduct Authority to place requirements on SVS, stopping it from conducting regulated activities and restricting it from disposing of assets. The FCA took these steps after it identified serious concerns about the way the business was operating. As a result, the directors obtained solvency advice and resolved to place the firm into Special Administration.