Following a decision by the FSA to initiate the special resolution regime SRR, and a subsequent application to court by the Bank of England, Southsea Mortgage and Investment Company Limited has been placed into the Bank Insolvency Procedure and BDO LLP has been appointed bank liquidator.
As of today, Southsea has therefore ceased trading.
The failure of Southsea, a small bank with just over 250 depositors, follows a deterioration in its financial position as a result of management decisions and the firm’s specific business model. At failure, the firm had retail deposits of £7.4 million.
The Financial Services Compensation Scheme is in place to protect eligible deposits up to the insured limit of £85,000. As a result of Southsea entering the SRR, the FSCS will pay compensation to each eligible depositor up to the limit of £85,000.
In order to minimise disruption and to provide access to funds, the FSCS intends to make its payout as quickly as possible. Retail depositors do not need to contact the FSCS to receive a payout as the FSCS will be contacting them.
Further details about the payout, including information about whether deposits are eligible, can be found at www.fscs.org.uk or by calling the FSCS on 0800 678 1100 or 020 7741 4100.
Eligible depositors with amounts in excess of the insured limit of £85,000 may be entitled to receive a share of their savings above this limit, as part of the insolvency process.
Depositors who are not covered by the FSCS will, like other creditors of Southsea, be able to claim in the insolvency. Such creditors should contact the bank liquidator, BDO, to register their claim on 020 7486 5888.
Anyone with mortgages or loans from Southsea should continue to make repayments and service their debts in the normal way. If they have any queries, they should contact BDO using the telephone number above.
In making this decision, the FSA have determined that the conditions for initiating the SRR under the Banking Act 2009 were met: ie that Southsea no longer satisfied the FSA’s threshold conditions for operating as a deposit-taker, and that it was not reasonably likely (ignoring any action which could be taken under the Banking Act) that action would be taken by, or in respect of, Southsea that would enable it once again to satisfy the threshold conditions.
In applying to the court, the Bank of England has acted under the powers conferred on it by the Banking Act 2009, having regard to the Code of Practice issued by HM Treasury.
The decision followed discussion with the FSA and HM Treasury and an evaluation of the possible resolution options against the SRR’s objectives laid down in the Banking Act.
