INVESTMENT manager Brewin Dolphin has posted a slump in profits after being hit by a multi-million pound charge from an industry compensation scheme.

The company, which employs around 15 staff at its Teesside site, saw pre-tax profits fall 27% to £21.9m in the year to September 30.

The slump was attributed to a series of one-off costs including a £6.1m levy from the Financial Services Compensation Scheme, which protects savers’ cash should a financial institution go out of business.

The levy was part of a multi-million pound pay-out to investors who lost money following the collapse of Keydata, which was shut down in 2009 amid concerns over some of its financial products.

Without the levy and other on-off charges, Brewin would have achieved a small rise in pre-tax profits.

Jamie Matheson, executive chairman at Brewin, said: “While clearly a charge of this nature is not something that any company would relish, or indeed anticipate, it is important that investors are provided with appropriate redress when the industry has clearly failed them.

“However, it is important to note that this is only part of the ongoing and increasing cost of regulation.

“We hope that the eventual outcome of a number of important Parliamentary committee hearings and industry inquiries will lead to more efficient and suitable regulation for private investors and greater confidence in the industry as a whole.”

Despite the hit from the levy, Brewin said the underlying performance of the business was “resilient”.

Funds under management rose 3.4% to £24bn and total income was up 10% to £264m.

Equity markets have been made more attractive to investors by high inflation and record low interest rates, which have made it impossible to get real-terms returns on most savings accounts.

Mr Matheson said: “It is the board’s belief that long-term equity investments will continue to have an important role.”