The decision taken by Reyker Securities to charge clients between £15 and £25 per investment for the safe custody and administration of Merchant Capital products continues to send shockwaves through the market, with the suggestion being made in some quarters that the regulator should ringfence the funds required for administration, custody and plan management arrangements for structured products.

Reyker Securities' head of risk management and strategy, Adrian Barnwell, told SRP that the UK Financial Conduct Authority (FCA) has been informed of every step of the process since it took over the transfer of assets from Merchant Capital.

"The terms and conditions made clear that in the event of failure of Merchant Capital, then Reyker could recover those payments from the consumers," he added.

Barnwell said that it is important to recognise that when the regulator withdrew the commissions from Pritchard Stockbrokers, the former custodian of Merchant Capital products, and facilitated the rescue of Merchant's structured investments, it in effect prevented those investors and their investments from getting caught up in Pritchard's insolvency proceedings.

"That we think was a good move and the regulator did its job very well," said Barnwell. "Reyker managed to get all the investors on board and started making income payments within three months. Bear in mind that before we could act we had to have a written contract, and to get that done very quickly was a big challenge."

According to Barnwell, out of the 17,000 clients with Merchant investments, there were less than five official complaints - and none of those was for more than £50. The rest of the complaints, he added, referred to actions by Merchant Capital and were reported regularly to the Financial Services Authority, the former City regulator.

"Clearly, investors are unhappy when Keydata, Arc, Pritchard, Merchant ... has a problem, but the important thing is that we said to those clients that we would continue to look after their investments for as long as they last," he said. "We did not ask investors to put their hands in their pockets upfront, and we believe the outcome for consumers will be a good one in the end because their assets have not been caught up in an insolvency procedure which would have put a stop to income payments, maturities, redemptions etc."

Barnwell added that despite the unfortunate set of circumstances for investors, there is a cost for the services that the firm is providing and it had to have capital in place to cover the process. "I think that shows commitment to the industry and the investors," he said.

Following the observations of Ian Lowes, managing director of Lowes Financial Management, criticising the move from Reyker to ask investors to pay again for the plan-management fees for their investments, the UK Structured Products Association (UK SPA) has issued a statement saying it is not in a position to comment specifically as the full details of the case have not been made public.

"We are in contact with the regulator to find out about what has led Reyker to their decision to charge investors additional fees, and will be following this up with discussions on how to ensure investors are protected in the future," read the statement.

"We note that some people have suggested investors should be covered by the Financial Services Compensation Scheme. We are interested to see what the regulator's view is on whether that should be the case in this instance, and how the industry can work better at mitigating the risk if it isn't possible."

The UK SPA added that, based on the facts to hand, "this is not an issue with the underlying products themselves but rather an issue with the firms involved in administering and providing custodial services for the products".