The Insurance Brokers' Registration Council has paid out only £14,000 towards a £2m compensation bill for claims against IBRC registered brokers.
This is despite the body that processes the claims and those relating to insolvent investment firms, the Investors' Compensation Scheme, having its busiest year on record.
The ICS paid out £1m of claims each week last year, says its annual report.
But the compensation body managed to settle only a tiny number of the estimated £2m worth of claims against current and former IBRC registered brokers. The ICS has been asked for a contribution of just £14,000 from the IBRC towards the total claims settled – more than two years after it agreed to compensate clients of IBRC members.
The compensation relates to a mix of claims for pensions mis-sold by IBRC registered brokers and clients of an ex-IBRC member firm, Irvine Donald (Stirling), which went bust.
A spokeswoman for the ICS said the reason for its apparent slow progress on IBRC claims was because firms had to be declared in default – unable to pay the claim themselves – before compensation could be paid.
In a deal broked by the Financial Services Authority in April 1999, the IBRC agreed to meet one-sixth or £350,000 of the total cost of the compensation bill.
It did this by raising a one-off levy on all its registered member firms.
It was agreed the ICS, which administers the scheme for current and former IBRC member firms, would meet the balance of the compensation bill. Although, there were plans to recover some of the cost from investment product providers.
The IBRC ceased to have responsibility for regulating investment business carried out by its registered broker members in July1999.