FSCS begins MF Global compensation action

The Financial Services Compensation Scheme (FSCS) has begun the process of compensating MF Global customers, with private customers with individual accounts the first to receive application forms.

It said it is adopting a "phased approach" to reaching out to customers and would move on to corporate accounts once MF Global administrators KPMG have obtained the necessary information and balance, probably by the end of February.

Mark Neale, FSCS chief executive says, "Although we will not be able to complete claims until KPMG is able to confirm account balances, we want to assure customers of MF Global that we are working with KPMG to ensure eligible claimants are compensated as quickly as possible."

The FSCS will be able to pay up to £50,000 in compensation per person and any individual account holders who do not receive an application form by 23 January 2012 have been told to contact the FSCS directly.

MF Global was declared bankrupt on 31 October last year, having accumulated $6.3bn in short-term European sovereign debt, $3.2bn of which was from Italy.

Royal Bank of Scotland is facing legal action over the collapse after two pension funds accused it of making misleading statements about the broker's exposure to European sovereign debt.