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MPs: We will keep pushing for Arch cru inquiry

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A group of MPs will continue to push for an investigation into the collapse of Arch cru despite the Prime Minister’s refusal to launch an independent inquiry, according to the group’s co-chair Tom Greatrex .

In November, All-party parliamentary group on Arch cru co-chair and Labour MP Tom Greatrex (pictured) asked David Cameron whether he would back an inquiry. Cameron admitted constituents of his had been affected and agreed to look “very carefully” at Greatrex’s request. He has since written to Greatrex saying the Government has yet to be persuaded an inquiry is appropriate.

Speaking to Money Marketing, Greatrex says Cameron’s constituents will be as disappointed as anyone and that the All Party Parliamentary Group will continue to press for the investigation and a better compensation for investors.

He says: “The PM made clear he had constituents affected by this, they will be as disappointed anyone else that the hopeful words seem to have been dashed. We keep hearing of new cases and getting more evidence something went seriously wrong so just because we had a disappointing holding answer we will not give up.”

Cameron’s letter confirms that under the Financial Services and Markets Act the Government does have the power to force an independent inquiry when it appears there has been a regulatory failure, adding that the case for that has yet to be made. The FSA is currently running its own investigation into what happened, targeting advisers who recommended the products to clients.

It says: “It was the FSA, as part of its routine ARROW inspection of Capital Financial Managers, that identified the issues with Arch cru, after which it moved swiftly, resulting in the suspension of the funds.”

Greatrex says that based on the information the group has now it is impossible to exactly pin the blame on any of the parties involved, but he says he does not rule out regulatory failure.

He says: “In crude terms Capita Financial Managers had a job to do in assuring investors of the risks, the FSA had a job to do in regulating Capita Financial Managers. Somewhere along that chain something went very badly wrong, suggesting there is a failure among those organisations, if there had not been we would not be here.

“The APPG will keep on at this until we are in a position where the Government realises this inquiry has to happen and feels it can order it. We must find out what went wrong and make sure it does not happen again.”

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Readers' comments (5)

  • In crude terms Capita Financial Managers had a job to do in assuring investors of the risks, the FSA had a job to do in regulating Capita Financial Managers. Somewhere along that chain something went very badly wrong so IFA's will have to pay and any that didn't spot what the FSA and Capita, with all their resources failed to see, will be made to pay with their livelihoods.

    What a corrupt and unfair regulatory world we live in.

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  • What Tricia is saying is how IFAs are being affected by the outcome the FSA is seeking to impose.

    Behind it is a small group of people inside Capita who absolutely do not want any investigation into their activities to come out.

    This is amply evidenced by the legal wall of secrecy driven by Capita that has come down on the affair, the routine denials of Freedom of Information Requests, and the wholesale restriction of information to investors about what went wrong.

    And before anyone is minded to challenge any of this, the new Regulatory Legal 540 response survey (available next 7 days) has damming comment from investors about their experience trying to deal with both these organisations.

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  • Thanks Chris. I never did any Arch Cru or Keydata but an enquiry is essential as there is a real stench about these cases.

    MP's should use this opportunity to make the FSA accountable for its failures. If they don't they will be endorsing the entire corrupt system.

    The system may not be corrupt but in financial services we are all guilty until we can prove ourselves innocent.

    A transparent and open regulator should have nothing to fear from a little light being shone on their activities.

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  • Totally agree Tricia, lets hope the MPs get somewhere. The PM seems to have his head in the sand!

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  • Well lets face it.. All depends on if a Directorship lies in the future for someone who had the right tie!

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