View more on these topics

Arch cru £54m compensation package may face judicial review

Pressure group Justice in Financial Services is looking to judicially review the FSA’s £54m compensation package for Arch cru investors.

In June, the regulator announced that Capita Financial Managers, BNY Mellon Trust & Depository Ltd and HSBC Bank had agreed to contribute to a £54m fund, which will be used to make payments to the eligible investors in the CF Arch cru Funds.

Investors deciding to take the compensation, which alongside distributions already made and the remaining assets is designed to give them around 70 per cent of the net asset value of their funds when the CF Arch cru fund range was suspended in March 2009, have to accept the payment as a final settlement of any claims against the three firms but can still pursue their IFA.

JFS filed its claim, prepared by QC Anthony Speaight and made on behalf of an IFA who recommended the funds, with the administrative court last week and it will be served on the FSA and Capita today.

The claim suggests the FSA was wrong to restrict the jurisdiction of the Financial Ombudsman Service as part of the package by artificially capping possible redress payments. Investors taking claims to the FOS will be restricted to receiving payouts in line with the £54m compensation package. The claim says the payment scheme should be seen as a “compromise” rather than as redress and argues that a public consultation was required to introduce such a scheme.

In a statement sent out over the weekend, JFS says: “A claim form for judicial review of the FSA-Capita deal to limit Capita’s contribution to making good the damage its incompetence and negligence inflicted on investors in Arch cru to under one third of their losses will be served on the FSA and Capita on Monday 24 September.”

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There is one comment at the moment, we would love to hear your opinion too.

  1. Joe Egerton - Justice in Financial Services 26th September 2011 at 9:15 am

    Anybody interested in the JFS action can obtain a briefing if they contact us through our website http://www.justiceinfinance.org.

    Our action will protect investors but it will also help the industry as a whole – if we fail the FSCS will face claims of between £100M and £150M. In near identical circumstances in 1996/7 IMRO made a fund manager compensate investors 100%. The failure of the FSA to stand up to Capita and Herbert Smith leaves investors uncompensated and the rest of the industry having to pick up the tab.

Leave a comment

Close

Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm

Email: customerservices@moneymarketing.com