Liverpool broker declared ‘failed’ as next phase of compensation process begins

Liverpool broker, Blankstone Sington (BSL), which had more than £400m of funds under management, has been declared ‘failed’ by the FSCS (Financial Services Compensation Scheme).

The company, which was renowned for brokering the sale of shares in Everton FC, entered special administration on October 16, last year, following a Court Order under the Investment Bank Special Administration Regulations 2011.

The Special Administrators – Andrew Poxon, Alex Cadwallader and Hilary Pascoe of Leonard Curtis – said they had secured all clients’ assets and safeguarded the company’s systems. Clients were assured that their assets are safe.

BSL was an FCA-authorised wealth management firm and a member of the London Stock Exchange, and was based in Liverpool’s Exchange Flags office complex.

On November 16, 2021, the FCA (Financial Conduct Authority) took temporary action to prevent BSL from disposing or diminishing the value of its own assets, accepting new client money or new custody assets from existing clients and from opening new client accounts, without the FCA’s written consent.

BSL was also required to place a notice on its website informing clients about the restrictions.

Special administration is a modified insolvency procedure for certain investment firms.

On November 1, 2022, Blankstone Sington revealed that it had recorded an annual loss due to the continued impact of actions by the FCA, it said.

The original restrictions were due to the “loss of several experienced staff who cannot easily be replaced”, the firm said.

The company announced that it had fallen to a pre-tax loss of £531,731 for the 12 months to May 31, 2022, compared with a profit of £63,618 in the previous year. Its turnover remained static at £3.2m over the same period, but its funds under management fell from £472.4m to £401.8m.

Now, the FSCS has issued an update, after declaring BSL ‘failed’.

In a statement it said: “On 21 December 2023, we explained that we expect to be able to pay compensation to eligible customers of Blankstone Sington.

“We have now taken the next step by declaring the firm in default. This is something we have to do as it confirms that FSCS believes the firm owes money to its customers and cannot meet the costs of any claims itself.

“We still remain closed to claims, so Blankstone Sington’s customers do not need to do anything at this point. There is still a considerable amount of work to do before customers can be reunited with their money and assets.”

It added: “We’re continuing to work closely with the Joint Special Administrators and will provide further updates, including timescales, when that information is available.”

It warned previously that, before it can make any compensation payments in accordance with the special administration process, the Clients’ and Creditors’ Committee and the Court must approve the Joint Special Administrators’ Distribution Plan, which sets out how customers’ assets will be returned to them.

How client money will be returned to customers will be set out separately. Both customer assets and client money are likely to be transferred to a new broker at the same time.