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Capita admits value of Arch cru funds is uncertain

Capita Financial Managers has admitted there is “significant difficulty and uncertainty” in assessing the value of around 75 per cent of the £149m in assets held in Arch cru funds.

Capita, the authorised corporate director of the CF Arch cru funds, published its annual accounts to the end of March earlier this week.

The accounts reveal the value of around 75 per cent of the £113m held in CF Arch cru investment funds, including the CF Arch cru investment portfolio and the CF Arch cru specialist portfolio, is uncertain.

Out of the £36m held in the CF Arch cru diversified funds, including the CF Arch cru global growth fund, the CF Arch cru balanced fund, the CF Arch cru income fund, and the CF Arch cru finance fund, around 70 per cent of the value is uncertain.

The accounts state that the fair value of the underlying cells of the funds cannot be reliably measured, with assessments on value often based on unaudited information and changes in market conditions having an impact on recoverable amounts.

The accounts for the CF Arch cru investment funds say: “These circumstances give rise to significant difficulty and uncertainty in ascertaining the recoverable amounts of the cell’s investments carried at cost less impairment. In respect of investment assets carried in the balance sheet of the company of £113m there is uncertainty over approximately 75 per cent of the value.”

The accounts for the CF Arch cru diversified funds quote the same reason for the uncertainty over 70 per cent of the value of the £36m held in the funds.

Ernst & Young, Capita’s auditors, says the accounts do not give a true and fair view of Capita’s financial position and of the investment portfolio sub-fund, and have not been prepared in accordance with UK accounting practice.

The figures cast doubt over the claim made by the FSA that the £54m compensation package agreed with Capita, BNY Mellon Trust & Depositary and HSBC in June will see around 70 per cent of the net asset value of funds when the range was suspended in March 2009, when combined with distributions already made and remaining assets.

Two judicial reviews have been launched challenging the terms of the compensation package. One is being brought by Justice in Financial Services on behalf of IFA Coull Money, while the second is being brought by law firm Regulatory Legal on behalf of 2,700 investors.


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There are 5 comments at the moment, we would love to hear your opinion too.

  1. Joe Egerton - Justice in Financial Services 18th November 2011 at 9:07 am

    May I emphasise that if the Coull Money JR succeeds, investors will get all the benefits that might flow from the R Legal JR and potentially rather more. The Coull Money JR was definitely filed inside the time limit – there is a questionmark over teh R Legal filing this week that will be resolved by teh Courts in due course.

  2. Keep up the good work Joe. Is this latest admission by Capita just more confirmation that they are/were totally out of touch & asleep on their watch. What else has got to happen to make the FSA realise that the initial ‘Not our fault Gov’ offer should have never been endorsed?

  3. Just shows that the FSA/CAPITA offer is anything but fair and reasonable.

    Why do reporters say the offer attempts to return 70% of investor’s money? The mythical 70% is 70% of a fictitious figure as at 13th March 2009. Hugh Aldous chairman of the SPL Guernsey funds has stated the true values at March 2009 are unknown.

    The simple fact is that, even if Spearpoint sold the remaining assets at the perceived value of a few weeks ago the best investors could hope for over the next 5 years is 50% of what they invested. Based on the above report 50% now looks like a pipedream.

    What this report also proves is that CAPITA had no idea what the actual underlying assets of the CISX quoted companies they were investing in were, and therefore could not have known whether the OEIC complied with COLL sourcebook regulations.

    When Neil Woodford invests in a quoted company does he invest just because he likes the name of the company? no, he researches the company speaks to the management and forms an opinion on whether he should invest. Financial Advisers have the right to expect that when Mr Woodford makes his decisions that they have been done professionally and diligently and his fund holdings are as stated in his marketing literature. The adviser can then decide whether investing in UK equities meet the client risk profile and assess Mr. Woodfords funds against other UK equity funds without having to worry whether the fund has in fact invested in Greek Shipping.

    If CAPITA or their delegate fund manager had been doing their job correctly then they would not have continued to invest in the CISX quoted companies during 2007 and 2008, as Mr. Aldous states there were clearly question to be answered by the CISX quoted companies back then.

  4. How can anyone believe a word that Capita say when it comes to Fund Values and the “70%” Compensation offer ?
    At the time of our Investment (Dec 2008)Capita stated one value (over £400M) then on March 13th another value (c.£325M)— Nov 2011,now what ??
    –and the FSA endorse all this and describe the “deal” as Fair& Reasonable “????
    This whole affair is disgusting and we can only pray that the JR’s ,Press articles and MP’s support ultimately delivers Justice for Investors—- and censure on all the Parties who have miss managed these Funds for so long .

  5. Capita Financial Managers is clearly not up to the job they were paid to do. The worrying thing is that Capita is also responsible for administering a number of other funds such as those managed by Ruffer, Troy Asset Management and Miton. If I were those managers I would want to kick Capita Financial Managers into touch as I am sure their own investors (such as me) must be feeling a bit uncomfortable with their association with Capita.

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