Merchant House Group plc has published an update on the situation resulting from the collapse of Pritchard Stockbrokers, the former custodian of Merchant Capital Structured Products.

John Gracey (pictured), director of structured products at Merchant told SRP that the main challenge at the moment is to get some clarity on the timing to resolve the issue: "The administrators are now in place and working out how to proceed," he said. "All we can do now is to wait until the administrators have done their due diligence. We are expecting some of the monies will be released fairly quickly."

The Financial Services Authority took action against Pritchard Stockbrokers Limited - now in administration - in February and as a result, client cash and client assets were frozen. Merchant Capital Limited took immediate action to make new custody arrangements and to appoint Reyker Securities plc as its custodian and administrator, with some £350m of structured product investments belonging to Merchant's clients transferred to Reyker on 9 March. Reyker is now checking and reconciling these assets.

Merchant said client cash remains frozen, but that it is working with the joint administrators, Timothy Ball, Roderick Weston and Alistair Wood of Mazars to expedite the release of client monies. Amounts received for the Merchant Capital Kick Out Plan: FTSE Issue 6; the Merchant Capital Deposit Plan: FTSE Bull & Bear Issue 1; and the Merchant Capital Growth Plan: FTSE Bull & Bear Issue 2 which did not proceed, have been frozen at Pritchard pending their release by the joint administrators.

According to Merchant, all income due on or after 9 March 2012 will be received on clients' behalf by Reyker, and will be paid out as soon as the new custodian has completed account opening formalities for the provider's clients.

However, income due on certain plans managed by Merchant which was received by Pritchard before the plans could be transferred to Reyker, will be passed to the joint administrators to process. As a result, payment of this income will be subject to a delay pending the completion of the investigation process now being undertaken by the joint administrators. Clients invested in those plans will be affected and their income will be delayed.

Merchant said it will write to clients directly to inform them and confirm further details.

The plans subject to delay include:

Arc Fixed Income Plan 12 (Monthly 0.65%)
Arc Fixed Income Plan 12 (Monthly 0.60%)
Fixed Income Plan 10 (Monthly 0.65%)
Arc Fixed Income Plan 10 (Monthly 0.57%)
Merchant Capital Income Plan: Capital & Income Lock-in (Issue 2)
Fixed Income Plan 15 (Monthly 0.50%)
Arc Fixed Income Plan 4 (Monthly 0.73%)
Arc Fixed Income Plan 4 (Monthly 0.61%)
Arc Fixed Income Plan 3 (Monthly 0.73%)
Arc Fixed Income Plan 3 (Monthly 0.61%)
Merchant Capital Income Plan: FTSE Issue 2
Arc Fixed Income Plan 5 (Monthly 0.60%)
Arc Fixed Income Plan 5 (Monthly 0.73%)
Arc Fixed Income Plan 8 (Monthly 0.69%)
Arc Fixed Income Plan 8 (Monthly 0.60%)
Quantum UK Protected Income Portfolio
Merchant Capital Income Plan: Capital & Income Lock-in (Issue 1)
Merchant Capital Income Plan: FTSE S&P Issue 1
Arc Fixed Income Plan 1 (Monthly)
IDAD UK Income Plan (Monthly)
Arc Fixed Income Plan 9 (Monthly 0.69%)
Arc Fixed Income Plan 9 (Monthly 0.60%)
Arc Fixed Income Plan 2 (Monthly)
Arc Fixed Income Plan 14 (Monthly Cautious)
Arc Fixed Income Plan 14 (Monthly High)
Keydata Extra Income Plan 15 (Quarterly)
London & Capital UK Regular Income Plan (Annual)
Arc Fixed Income Plan 11 (Monthly 0.71%)
Arc Fixed Income Plan 11 (Monthly 0.63%)
Arc Fixed Income Plan 11 (Monthly 0.63%)
Merchant Capital Income Plan (Option 1)
Merchant Capital Income Plan (Option 2)
Arc Accelerated Income Plan 9
Merchant Capital Income Plan: FTSE Bespoke