FSCS Updates Clients on Dolfin Compensation Process

The FSCS Dolfin Compensation Process has entered a critical phase as the UK Financial Services Compensation Scheme provides a formal update to clients of Dolfin Financial (UK) Ltd amid ongoing administration proceedings. The development marks a significant step in efforts to address client claims and asset returns following the firm’s collapse. Dolfin previously operated as an independent wealth management company, delivering investment management, advisory, execution-only, and custody services to domestic and international investors.

However, on 12 March 2021, the Financial Conduct Authority imposed restrictions on the firm through a First Supervisory Notice, effectively preventing it from carrying out regulated activities in the normal way. As a result, Dolfin’s board initiated an orderly wind-down and, on 30 June 2021, the company entered Special Administration following a court application. Since then, joint special administrators have overseen the process and now intend to seek court approval for a Distribution Plan. 

FSCS Updates Clients on Dolfin Compensation Process

Once approved, the plan will allow the return of customers’ custody assets. In addition, administrators will be able to recover Custody Asset Transfer Costs either directly from clients or by deducting them from the custody assets themselves. Meanwhile, they are also arranging the distribution of client money balances as of 30 June 2021, along with corporate action income received after that date. 

Importantly, costs related to distributing client money will be deducted from claims within the client money pool. FSCS confirmed that it will not open for claims against Dolfin until the court approves the Distribution Plan and the return process has substantially progressed. Furthermore, it emphasized that it will assess compensation on a claim-by-claim basis. The scheme may compensate eligible customers for shortfalls arising from custody asset and client money transfer costs, up to the compensation cap of £85,000 per person. 

It clarified that “the £85,000 limit applies to the total value of all compensable losses relating to Dolfin,” meaning customers cannot claim separate limits for different cost categories. Notably, FSCS will not compensate customers for shortfalls related to corporate action income. It also stated that not all clients will qualify as “eligible claimants,” as certain corporate entities fall outside its protection rules. Finally, FSCS explained that it will only process claims once losses have crystallised, which will occur after court approval, payment of relevant costs, and confirmation of final distribution amounts.

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