Customers of collapsed Newcastle-based wealth manager WealthTek are likely to have any losses refunded by the Financial Services Compensation Scheme up to the scheme’s £85,000 limit per person.

On Friday the FSCS said: “We now anticipate that, for customers who are eligible under FSCS rules, we are likely to meet any losses suffered.”

The Financial Conduct Authority ordered the Newcastle-based wealth manager to cease all regulated activities in April following the discovery of regulatory and operational issues.

The firm’s boss John Dance was arrested in connection with the investigation and has been interviewed by the regulator under caution.

The High Court appointed Shane Crooks, Mark Shaw and Emma Sayers of BDO LLP as joint special administrators of WealthTek, while the FCA obtained a worldwide order to freeze assets belonging to Mr Dance up to the value of £40m.

In June administrators at BDO LLP said they had uncovered a £81.4m gap in the firm’s finances.

Last week the FSCS said it had been continuing to work closely with the administrators about whether there are any claims that are eligible for FSCS compensation. It said eligible customer losses are likely to be met in relation to the following;

• the costs of returning client money to the customer and;
• the costs of transferring any assets to a new broker - provided the particular assets are covered by FSCS's rules.
• client money shortfalls, that have occurred as a result of WealthTek not holding all the client money that it had undertaken to hold for that customer; and
• client asset shortfalls that have occurred as a result of WealthTek not holding the client assets it had undertaken to hold for that customer.

Before any payment can be made the joint special administrators’ distribution plan – which sets out how customer’s property will be returned to them – will need to be approved by the clients' and creditors' committee and the court.

The FSCS said it doesn’t yet have a timescale for how long it is likely to take to return money and assets to customers.

It said: “The joint special administrators will be providing more updates as their work progresses. We will continue to work closely with them and will provide further updates ourselves, including on timescales, when that information is available.”

At the moment, WealthTek customers do not need to take any action regarding FSCS compensation, it added.