Court again rejects bid to review FSA’s cru compensation

The High Court has rejected campaigning group Justice in Financial Services’ application for a judicial review of the FSA’s Arch cru compensation package for a second time.

An oral hearing was held at the Royal Courts of Justice in London last week after the application was initially rejected in January.
Joe Egerton, who leads JFS, filed the claim in September on behalf of Coull Money, an IFA that recommended the funds.

In June, the FSA agreed a £54m compensation package between Capita Financial Managers, BNY Mellon Trust & Depositary and HSBC Bank.

The deal was estimated to return investors around 70 per cent of the value of the funds as at March 2009 when the range was suspended, set alongside distributions already made and remaining assets. Latest valuations from Capita put this figure at 66 per cent.

Egerton says: “The FSA appears to be in a position where it can make whatever rules it likes. We are considering whether or not to appeal.”

Regulatory Legal is seeking a separate judicial review of the compensation package on behalf of 2,700 investors.

A decision on the application was expected last month but has been delayed after Regulatory Legal amended its claim in light of the £150m legal action being taken against Arch Financial Products.

Last month, the board of 18 Guernsey-listed investment vehicles accused Arch Financial, the fund manager at the centre of the Arch cru debacle, of breaches of duty in the way it managed the investment portfolio of the cell companies between July 2007 and November 2009.

Jacksons Financial Services managing director Pete Matthew says: “In an ideal world, investors would get 100 per cent of their money back but as the application for a judicial review has been rejected again, it looks like they may have to accept less.”