FSA confirms Arc Capital & Income in administration
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Structured product provider Arc Capital & Income is going into administration, says the FSA.
The announcement follows compliance errors made by the firm in June 2008 in relation to Lehman product promotional material and is part of an extensive FSA review into Lehman-backed structured products and subsequent discussions with the firm.
The FSA’s review looked at the UK structured products market, including those backed by Lehman Brothers, and as part of this review examined the firm’s systems and controls and marketing literature.
The FSA asked the firm to assess its financial position in relation to potential claims by investors with Lehman-backed structured products.
Carter Backer Winter has been appointed as administrator and will contact all customers who bought products through this firm within a week setting out what they need to do next.
The FSA says consumers who had invested in Lehman-backed products with the firm may be entitled to compensation from the Financial Services Compensation Scheme as it is now deemed to be in default.
Earlier today, Money Marketing reported that the FSA is understood to have concluded that one of the firm’s structured plans was wrongly marketed and that the firm was facing FSA liabilities for client losses of around £5.7m.
ACI dealt with approximately 10,000 UK investors and the FSA says the today’s news affects customers who have bought structured products through ACI over the past five years.
The firm says the administration process should have a limited effect on the service clients receive in relation to existing plans. It says all client monies and assets are kept segregated from the assets of the company itself and are not affected by the administration process.
An ACI spokesman says: “Despite increasing success, in terms of both sales and profitability, with its current staff, errors made in June 2008 in compliance in relation to Lehman product promotional material has resulted in the situation that the company now finds itself in.
“It remains our top priority to ensure that IFAs and clients are kept informed at every stage of the process and that this situation is made as easy as possible for them. The company and its staff are working actively with administrator to ensure that the best possible solution for all our clients is reached.”
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Readers' comments (7)
Anonymous | 26 Oct 2009 11:55 am
this just again goes to show how important it is to look under the bonnet within the structured product market.Having attended a excellent investment seminar which included a detailed cross examination of strutured products headed up by Chris Taylor of Blue Sky the news confirms that you really need to be careful who you buy from in this space but at least it appears clients will be able to claim from the ICS which at one point seemed in doubt.There is good bad and ugly i suppose in all sectors lets see whos standing in anther 3 months.
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Anonymous | 26 Oct 2009 11:56 am
What EXACTLTY are these "errors made in June 2008 in compliance in relation to Lehman product promotional material". How do these documents differ from previous ones?
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David Bartleet | 26 Oct 2009 12:04 pm
Another fine example of closing the gate after the horse has bolted
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Anonymous | 26 Oct 2009 12:35 pm
How many structured product providers will survive......? This is the third put into administration out of an original list that included the likes of L&G but no word yet about them or the others associated with Lehman backed products!?
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Anonymous | 26 Oct 2009 1:54 pm
It appears to me that FSA are finding reasons to force the SP providers in Administration, so as to allow the FSCS to kick in. Now pardon me if I'm wrong, but Lehman's failing was an investment risk, and that means that unless the client was poorly advised then its tough luck. To simply find reasons to bin the providers is simply wrong, as this will remove one of the risks of investment. You can't simply put money into an investment and expect to get your money back, regardless of what transpires.....
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David Rangeley | 26 Oct 2009 5:39 pm
I wonder if anybody has ever done any research into structured products to see how many investors over, say, the last decade, ever made a decent return commensurate with the risk, or compared to safer products. First we had precipice bonds, then those where only the capital was guaranteed, and now we have worthless counterparties.
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Anonymous | 26 Oct 2009 7:19 pm
So which one of the new wave providers is the oh so virtuous 'Anonymous'?! And who was his English teacher?
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