The average amount to be returned to Arch cru investors under the FSA-agreed £54m compensation package has fallen again to 64 per cent of the value of the funds at suspension.
The FSA agreed the payment scheme between Capita Financial Managers, BNY Mellon Trust & Depositary and HSBC Bank in June. The FSA estimated at the time the compensation package would return investors an average of 70 per cent of the value of CF Arch cru funds as at March 2009 when the fund range was suspended, alongside distributions already made and remaining assets.
Capita has written to Arch cru investors this week to remind them the deadline to accept the offer redress under the payment scheme is December 31.
The letter includes the latest valuations from Capita of the estimated total return to investors under the compensation package based on net asset values as at February 29. The valuations show investors stand to get an average of 64 per cent of the value of the funds, compared to 66 per cent as at the end of September.
Investors in the CF Arch cru investment portfolio are facing estimated total returns of 62 per cent.
The return paid to investors through the compensation package impacts the amount of redress that will have to be paid by advisers where there has been an upheld complaint to the Financial Ombudsman Service or through the FSA’s proposed consumer redress scheme.
Where the FOS upholds a complaint against an adviser that recommended clients invest in Arch cru, redress is calculated minus the amount received from the FSA payment scheme. A smaller amount of compensation means advisers are liable for a greater amount in redress.
The FOS cannot now accept any new FOS complaints against Capita, BNY Mellon or HSBC as the six-month deadline to submit complaints has passed.
The FSA is consulting on whether to establish a separate £110m consumer redress scheme for Arch cru investors. Firms that recommended Arch cru will have to review whether the advice was suitable and if not pay redress. This redress calculation would also take into account payments made under the £54m compensation package.