Investors in Merchant Capital structured products are likely to be asked to pay additional fees to the former custodian of the plans, Reyker Securities, following the collapse of the former’s parent company, Merchant House Group, into administration.
Reyker said that the structured products arm had been obligated to pay for the ongoing custody and administration costs relating to structured product plans that it managed, but that it could not.
Go deeper with GlobalData
Access deeper industry intelligence
Experience unmatched clarity with a single platform that combines unique data, AI, and human expertise.
Under terms and conditions issued to investors in 2012, Reyker is allowed to impose additional charges on investors in certain circumstances, such as the administration of Merchant Capital.
Charges will come into effect in July 2013, but investors will only have to pay these when their plans mature, kick out, or are redeemed.
Based on a GBP25,000 (US$38,835) plan, customers will pay Reyker a minimum of GBP75 a year. Those with capital plans will pay GBP115 a year, while those with monthly income plans will pay GBP195 a year.
It also predicted a lifetime cap on charges of GBP500 for a capital plan and GBP600 for an income plan. Clients wanting to redeem their plans early face a withdrawal cost of GBP250, plus accrued custody charges.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataReyker also charges GBP3.50 per document posted, plus GBP20 for ad hoc portfolio valuations.
Reyker director, Pippa Brown, said: ‘The latest costs for consumers have arisen directly because of the failures of Merchant and Pritchard. Merchant had to cover the cost of ongoing custody work and evidently was under resourced to do this."
"Merchant’s failure to meet its obligations mean Reyker now has no option but to charge consumers for the work we do for them," Brown said.
