The company set up by the Government to compensate investors in collapsed financial institutions has run up a deficit as a result of a €2.2 million pay-out to former clients of W&R Morrogh, the stockbroking firm that went into receivership last year.

The Investor Compensation Company (ICC) reported a €141,758 deficit in one of its two reparation fund accounts and expects to pay a further €3 million to Morrogh clients, according to its annual report.

Some 579 claims have been settled and 1,880 are outstanding.

It is unclear how much ICC may have to pay because Morrogh administrator Mr Tom Grace has filed an affidavit with the High Court summarising difficulties experienced in relation to the distribution of its assets.

Regardless of the outcome of the hearing, ICC is on track to achieve at least a €5 million reserve in both accounts within 18 months, according to chairman Mr Joe Maher.

The company's "Fund A", for payments in regard to the collapse of stockbrokers and credit institutions and individuals providing investment services, drew a €141,758 deficit following settlement of claims against Morrogh. "Fund B", which compensates investors in collapsed tied insurance agents, credit unions and multi-agency intermediaries authorised by the 1995 investment intermediaries act, has a €3.49 million positive balance.

ICC is funded through a levy on investment firms.