Arch cru fund falls mean IFAs set to pay out more

Some Arch cru investors may get much less than they were expecting from the FSA’s compensation package due to falls before the funds were suspended, leading to fears that IFAs could be forced to pay higher redress.

In June, the FSA agreed a £54m compensation package for Arch cru investors with Capita Financial Managers, BNY Mellon Trust & Depositary and HSBC Bank.

At the time, the regulator said it expected investors to get 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.

Investors can pursue their adviser to recoup the rest of their original investment.

Documents obtained by Regulatory Legal show that between September 17, 2008 and March 12, 2009, the net asset value in the CF Arch cru investment portfolio dropped by 12 per cent from 115.19 to 101.81 while the specialist portfolio fell by 10 per cent from 114.47 to 102.91.

The value of the investment portfolio fell by almost 6 per cent in the two days before the funds’ suspension on March 13 while the specialist portfolio fell by over 4 per cent over the same period.

Authorised corporate director Capita has admitted there is “significant difficulty and uncertainty” in assessing the value of much of the remaining assets held in the funds.

In a provisional decision last month, the Financial Ombudsman Service ordered an IFA to pay redress to Arch cru clients. The adviser will have to pay the original investment plus interest less withdrawals or distributions already paid and any amount received from the compensation package.

Paladin Financial Services managing director Tim Purdon questions why advisers can be pursued for compensation, given the regulatory failings over Arch cru.
He says: “It is the regulator that has the power to ask in-depth questions of fund providers, not IFAs.

“Are we going to reach a stage where all the remaining IFAs are doing is working to pay compensation in respect of advisers who sold these investments and have left the industry?”



ABI director Peter Vipond to join FSA

The FSA has appointed Association of British Insurers director Peter Vipond as head of department within the regulator’s insurance division. Vipond (pictured) will head up the newly created insurance sector and prudential support department at the FSA and is due to start in the role early next year. Vipond previously held the role of director […]


Tom Baigrie: What we learnt about protection in 2011

Well, how was it for you dear? You are a rare bird if the reply is positive about your career this year.It has been a very fraught and even frightening year – scandals kept on coming, markets kept on falling, businesses kept on consolidating, P45s kept on arriving, except at the regulators, where far too […]


FSA bans and fines ex-UBS adviser £150k

The FSA has banned and fined a former UBS client adviser £150,000 for circumventing securities rules. Jaspreet Singh Ahuja was a client adviser within UBS’s international wealth management business in London. Between January 1, 2006 and January 30, 2008 he used a pre-existing investment structure to enable an Indian resident customer to breach Indian law […]


News and expert analysis straight to your inbox

Sign up


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

  1. Whatever happens, it always seems to be the advisers will have to pay out even more redress.

    What’s happening about the investigation on the part of the office of the PM into the FSA’s allegedly dodgy hand in cobbling together what appears now to be a completely inadequate compensation deal? Surely, until that’s complete, neither the FSCS or anybody else shouild be making pronoucements as to who may have to pay what?

Leave a comment


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