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.”