New figures reveal the extent of Arch cru investor losses
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Figures revealing the fall in the value of Arch cru funds before the range was suspended in March 2009 show investors may only receive around 40 per cent of their investment from the FSA’s compensation package.
The FSA agreed a £54m compensation package for Arch cru investors with Capita Financial Managers, BNY Mellon Trust & Depositary and HSBC Bank in June.
When announcing the compensation package the FSA said it expected investors to receive around 70 per cent of the net asset value of the Arch cru funds when the range was suspended in March 2009, when combined with distributions already made and remaining assets.
Documents setting out the Net Asset Value of the range from September 2008 until March 2009 when the range was suspended, show the extent of investor losses before the suspension of the range.
Between September 17, 2008 and March 12, 2009 the NAVs in the CF Arch cru investment portfolio dropped from 115.190 to 101.810, while the specialist portfolio dropped from 114.470 to 102.910.
Someone who invested £10,000 in the portfolio A accumulation fund in September 2008 would receive just £4,340 from the compensation package.
The net asset values information shows the value of the investment portfolio fell by almost 6 per cent in the two days prior to the funds’ suspension, while the specialist portfolio fell over 4 per cent over the same period.
A spokesman for Regulatory Legal says: “An investor who typically invested in 2008 can see how badly their investment has fared, and can also see how low the FSA-agreed 70 per cent offer appears compared to their original investment.”
Capita, which acted as the authorised corporate director of the CF Arch cru funds, published its annual accounts to the end of March last month. In its accounts Capita admitted there is “significant difficulty and uncertainty” in assessing the value of about 75 per cent of the £113m worth of remaining assets held in the CF Arch cru investment funds.
It says there is also uncertainty over 70 per cent of the value of the £36m held in Arch cru diversified funds.
In a provisional decision published last month, the Financial Ombudsman Service upheld a complaint against an IFA who recommended clients to invest in Arch cru.
The IFA has been ordered to pay redress based on the original investment plus interest, less withdrawals or distributions already paid. Any amount clients receive from the compensation package will then be deducted to give the total redress amount.
Investors can pursue their adviser to recoup the rest of their original investment.
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Readers' comments (5)
Joe Egerton (Justice in Financial Services) | 8 Dec 2011 5:11 pm
As we said when we first became involved in this, the only possible way of establishing the truth about any aspect of this murky business is an Inquiry under S14 of FSMA. The Treasury is refusing to implement one. We have suggested to the Treasury Committee that the Commons should amend the new legislation to allow Parliament to require the Treasury to set up an Inquiry
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Chris Clark | 8 Dec 2011 9:09 pm
Very much supporting Joe's comment here, and just to add that whilst, unfortunately, thanks to legal engineering it is the case that there is redress as the tail end of the article describes, the Regulatory Legal Arch cru Steering Group is very much of the view that Capita and the FSA:
- oversaw the Arch cru meltdown
- failed in their duty by not investigating
and they should provide 100% restitution to the investors with interest.
They remain the central focus of the R L campaign. And most certainly not honourable IFAs who have stuck with their clients through thick and thin.
Chris Clark
PR/Communications
Regulatory Legal Arch cru Steering Group
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Exasperated Me | 9 Dec 2011 8:02 am
Is it all about legislation that protects the regulators and their creators? Are there no morals up there?
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Julian Stevens | 9 Dec 2011 1:21 pm
Does anyone know why the compensation package, the cost of which is to be shared between Capita Financial Managers, BNY Mellon Trust & Depositary and HSBC Bank, is going to be limited to just £54m? Why not the full amount?
Why did the FSA have a hand in putting it together? And why aren't all other providers being hit with the cost of making good the shortfall between what Capita Financial Managers, BNY Mellon Trust & Depositary and HSBC Bank are contributing and the full cost of compensating investors?
We can be fairly certain that if there was any way in which the FSA and the FSCS could have classified ArchCru as an intermediary, there'd have been no hesitation in dumping the entire bill on the IFA community. It all stinks to high heaven.
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Anonymous | 11 Dec 2011 11:03 am
Have said it many times... captia never had a clue what the correct NAV price of any of its fund fund range let alone Arch Cru and didnt even have proceedures to check any NAVS until post arch cru melt down. what a joke that the FSA is trying to let them get away with its incompetence as ACD! anyone who has ever lost money in any fund administered by Capita should complain as Arch Cru is just the tip of the iceburg. How do I know? because I worked there for a number of years and know the truth.... pity the FSA wanna sweep it all under the carpet but not suprised...
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