Southsea Mortgage and Investment bank shut down
The Southsea Mortgage and Investment Company has been shut down by the industry regulator.
The Financial Services Authority closed the Portsmouth-based bank after it struggled to wind down its business following economic pressures.
The bank had just over 250 depositors and retail deposits of £7.4 million when it was closed.
The Bank of England said the closure "follows a deterioration in the bank's financial position as a result of management decisions and the firm's specific business model".
Savers will receive a payout from the Financial Services Compensation Scheme (FSCS), which protects deposits up to £85,000. The FSCS intends to make its payouts as quickly as possible.
Retail depositors needn't contact the FSCS as they will be contacted in due course. In the meantime, further details about payouts can be found at fsa.org.uk or by calling the FSCS on 0800 678 1100.
Depositors who are not covered by the FSCS or who have savings above £85,000 will be able to claim for what they are owed by calling the insolvency liquidator, BDO, on 020 7486 5888.
Generally speaking, insolvency is to businesses what bankruptcy is to individuals. A company is insolvent if the value of its assets is less than the amount of its liabilities, or it is unable to pay its liabilities (loan payments) as they fall due. It’s an offence for an insolvent company to keep trading, so the main options available to an insolvent company are: voluntary liquidation, compulsory liquidation, administration or a company voluntary arrangement.
The Financial Services Authority is an independent non-governmental body, given a wide range of rule-making, investigatory and enforcement powers in order to meet its four statutory objectives: market confidence (maintaining confidence in the UK financial system), financial stability, consumer protection and the reduction of financial crime. The FSA receives no government funding and is funded entirely by the firms it regulates, but is accountable to the Treasury and, ultimately, parliament.
The Financial Services Compensation Scheme is the compensation fund of last resort for customers of authorised financial services firms. If a firm becomes insolvent or ceases trading, the FSCS may be able to pay compensation to its customers. Limits apply to how much compensation the FSCS is able to pay, and those limits vary between different types of financial products. However, to qualify for compensation, the firm you were dealing with must be authorised by the Financial Services Authority (FSA).