The Financial Services Authority (FSA) has secured a court order placing Southsea Mortgage and Investment Company into the Bank Insolvency Procedure. BDO LLP has been appointed as liquidator.
According to the FSA, Southsea was a small bank with a portfolio of lending funding housing developments in the local area.
Eligible depositors with balances up to the limit of £85,000 are safeguarded by the Financial Services Compensation Scheme (FSCS).
Southsea borrowers should continue to make repayments in the normal way and BDO will contact customers to explain what else needs to be done.
Borrowers will be compensated for money deposited with the bank, up to the FSCS limit, regardless of any money owed to Southsea.
An exception to this is if a savings or current account is combined with a mortgage account, and operates as a single overdraft.
Finally, arrangements are to be put in place by HMRC that will ensure customers who have ISAs with Southsea can transfer their accounts to another providers, while keeping their tax-free status.