WorldSpreads Limited Enters Special Administration Regime

Jack Humphrey, Regulatory journalist
March 22, 2012 /

The Financial Services Authority (FSA) confirms that WorldSpreads Limited (WorldSpreads), a spreadbetting company, has entered the Special Administration Regime (SAR) on 18 March 2012. Upon the application of the directors of Worldspreads, the High Court has appointed Jane Moriarty and Samantha Bewick of KPMG LLP as joint special administrators.

Worldspreads Limited is a wholly owned subsidiary of Worldspreads plc, a company incorporated in Dublin, Ireland and listed on Alternative Investment Market and on the Irish Stock Market, ESM. This is the third time the SAR has been initiated.

Meanwhile, the Financial Services Compensation Scheme (FSCS) is aware of the situation with the firm and is working with the administrators, KPMG, to understand how the firm’s failure might affect consumers and the role FSCS might play.

The FSCS protects consumers who lose money when authorised financial services firms go bust. It is liaising with the administrators and the FSA to get the information and data it needs to analyse potential claims under its rules.

The administration of Worldspreads follows the discovery of accounting irregularities which the company became aware of during the course of Friday 16 March 2012. Following this it quickly became apparent that the company was unable to continue in business and the directors and their advisors concluded that the best course of action, in order to mitigate losses for clients, would be to place the company into special administration.

The Special Administration Regime came into effect in February 2011 and sets three objectives for a special administrator: to ensure the return of client assets as soon as practicable; to ensure timely engagement with market infrastructure bodies and the authorities; and either to rescue the firm as a going concern or wind it up in the best interests of the creditors.

The joint special administrators will review the client cash holdings positions and will return as much cash as possible directly to each client as soon as practicable. However, clients should be aware that any shortfall in the client money accounts will impact the amount of money that can be returned.

Depending on individual circumstances customers may have access to the Financial Services Compensation Scheme (FSCS) should there be any losses. Customers should contact the special administrators to understand more about implications for them personally.

Customers of WorldSpreads should contact the joint special administrators for more information on 020 3284 8829.

The FSA can direct the special administrator to prioritise one or more of these objectives if it considers that to be necessary on UK financial stability grounds but before it does so it must consult HM Treasury and the Bank of England.

The special administrator can direct any suppliers to continue to provide key services to the entity in the SAR, to facilitate an orderly resolution.

FSCS Chief Executive Mark Neale says “We are working closely with the administrators and the FSA to understand the scale of consumer losses and potential claims for the FSCS. We will do all we can to provide certainty to customers of the firm as soon as possible. There is no need to contact FSCS at this time. Please direct any enquiries to the administrator. We will publish an update on our website as soon as we are able to provide more information on the potential claims and the process we will use to settle them.”

Since 2001, FSCS has protected more than 4.5m people and paid out more than £26bn in compensation to UK consumers.

 

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