The Financial Services Authority (FSA) has confirmed that claims at the Financial Services Compensation Scheme (FSCS) relating to failed stockbroker Direct Sharedeal - which could total £13m - will be paid for by investment advisers.
The FSCS has begun paying out the claims of investors who put money into high risk contracts for difference (CfD) with trader Direct Sharedeal, after it started accepting claims last May.
CfDs are highly-leveraged investments which open investors up to increased speculative gains but also large potential losses.
The Glasgow-based stockbroker entered administration in 2011 after alleged mismanagement of CfD investments, with many investors claiming that their accounts were overtraded leading to substantial losses.
A report by the joint administrators of the firm, Finn Associates, last year suggested claims could potentially reach up to £13m.
Compensation costs at the FSCS are paid for by levy payers. Costs are allocated to and divided among a sub-class or group within financial services, based on the activity that has caused the claims.
A spokesperson for the FSA said that they understood from the FSCS that Direct Sharedeal claims would be attributed to the SD02 sub class - which is made up of investment intermediaries.
