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Clients to reject Arch cru deal

Large numbers of Arch cru clients are likely to reject the £54m FSA compensation package and continue their fight against parties involved in the saga, according to Regulatory Legal.

The law firm says almost 500 of its 2,736 Arch cru clients have already suggested they are likely to reject the deal brokered last month between the FSA, Capita Financial Managers, BNY Mellon & Depository and HSBC Bank.

The regulator says the deal, when added to the distributions already paid and the value of the remaining assets, would give investors an average of 70 per cent of the net asset value of the CF Arch cru fund range when it was suspended on March 13, 2009.

Investors taking the compensation must agree it is in full and final settlement of any claims against the three firms but could still claim against their IFA.

Regulatory Legal partner Gareth Fatchett says: “The feedback that we are getting from investors is that they are unhappy with this cosy deal which they believe has let Capita and the FSA off the hook.”

There are fears that investors who take the compensation package are likely to claim against their IFA for the remainder of the lost assets in a move which could threaten a number of small firms.

Informed Choice managing director Martin Bamford says: “We are bound to see more IFA firms close on the back of this as investors accept the deal and then go straight after the IFA over the liability. In some cases, it will reach the FSCS and it is bound to have an impact on the levy at some point, it may not be this year but possibly the year after.”

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Comments

There are 13 comments at the moment, we would love to hear your opinion too.

  1. Karl the Pessimist 6th July 2011 at 1:17 pm

    Why does it not surprise me that Regulatory Legals clients are to reject this deal?
    Is it because if the case keeps rumbling on, RL will get more fees?
    Is it because, once the investors get their ‘circa 75%’ back, less RL’s fees, it wont be as much?

    Most people I have spoken to are to accept it, then still go after the Adviser themselves for wrong advice through FOS or FSCS. Why look a gifthorse in the mouth?

    As an adviser and firm that has never fortunately never been involved in this, I cannot see the difference between this and the Integrity fiasco. They were both flawed investments that were pushed heavily by advisers chasing commission.

    In that latter case, wer’nt RL taking action against Advisers, not Integrity, so which hat does Mr Fatchett want to wear?

    Clients can complain directly to FOS and FSCS and receive the same outcome without using a middleman, as was highlighted in a FOS report a week or two ago.

    I will bet that the clients I have come across in Arch Cru will get more compensation (& quicker) in the end from going direct than those using the services of RL.

  2. I hope all these investors take the recent FOS & FSCS reminders that 3rd parties are not required to submit claims, and do not increase the chances of success – and may leave the investors worse off financially.

    A crude example:
    Say £100,000 invested.
    70% compensation package = £70,000 returned

    Use a 3rd party and go via the FSCS, so get approx. 90% = £90,000

    THEN pay the 3rd party 25%, £22,500, of YOUR redress as fees, and what are you left with?

    £67,500.
    Approx. the same as if 3rd party not used and no hassle.

  3. No doubt Mr Fatchet will defy his critics by continuing to represent his clients on a pro bono basis, with no prospect of income.

    Sorry, was that a pig that just flew overhead ….?

  4. Michael Cotter (Regulatory Legal) 6th July 2011 at 2:18 pm

    It may just be that some client’s after many years of waiting for a response, find the announcement by the FSA, Capita Financial Managers, BNY Mellon & Depository and HSBC Bank derisory and further, post the headline many are left wondering what the substance below is to be (wait until August we are all told…).

    It can only be a good thing that people do not simply roll over at the first sign of an offer to draw a line under this disappointing matter.

    The comment’s by Karl and Anon above in respect of fees is disappointing although as ever to be expected. We have always made it perfectly clear, we expect commercially to do well out of any business.

    How does that differ from any other worthy business model?

  5. Ambulance chasing has never been a “worthy” business model…

  6. It is a real shame when you come to think about it.

    From what I hear Regulatory Legal used to have a reasonable reputation within the financial services industry. However, their behavour over Keydata (standard complaint letter regardless of clients individual circumstances) and now Arch Cru (reasonable offer given the circumstances) has merely consigned them to the level of a bog standard ambulance chaser. – such a shame

  7. My IFA recommended putting some money into Arch Cru based on figures and values which were ultimately the responsibility of Capita (ACD) to validate and audit. The subsequent suspension and devaluation would suggest they were not up to the task. The fund was sold to me based on false data, which unless it is my IFA’s job is to monitor the buys and sells of EVERY fund for EVERY client EVERY day, he wouldn’t have had a clue was iffy.

    Why should I pursue someone with over 25 years in the business and no complaints against him just because others don’t want to admit their mistakes. To do it just because I can is wrong and immoral. I would very much like Capita/FSA/FOS, whoever , to prove they are blameless before I wreck someone’s career. Capita were authorised by the FSA and the Fund was rated Cautious by the IMA. It was my first investment and I had no idea such ‘protection’ counted for nothing.

  8. Michael Cotter (Regulatory Legal) 6th July 2011 at 3:36 pm

    If no accident had occurred, the ambulance would not need to arrive.

    Sensible advisers will not seek to support those that cause the ‘crash’.

  9. And that’s why IFA’s are such an easy target. Situations like this show large institutions they can walk all over IFA’s. I am sure if these cases are allowed to pass with no detriment to large companies, it sets a precedent for others to follow. Arch cru, keydata etc will be regular events. I am sure no IFA will get away unscathed as this behaviour proliferates. No room for smugness then.

  10. I have no clients invested in Arch Cru and hence no axe to grind. I find Anonymous | 6 Jul 2011 3:17 pm attitude refreshing. They want the truth BEFORE they even think about pursuing the adviser.
    There may have been some contributory negligence on the part of teh adviser, but the adviser and client could reasonably expect Capita to have doen what it was supposed to and the question is firstly woudl ANY loss have occurred if they had doen as they were suppsoed to. If not, then that is Capita’s problem, solely, if it was mainly Capita’s, then teh adviser’s responsibility is a seperate issue.
    We need to know the basis for the FSCS decision to know whetehr it is fair and reasonable or if they are preferring the big firms over the little advisers (who find it much harder to defend against complaints and are more likely to be put out of business completely)
    As with Keydata, all consumers and IFAs want is the truth and only the guilty party to pay, but teh problem at present apepars to be guilty parties may include the FSA itself, but they are immune from any responsibility and still get paid their £20million in bonuses even when they fail!

  11. Gareth Fatchett 6th July 2011 at 9:16 pm

    Karl,

    I can assure you that we take our responsibility to our investor clients very seriously. The bottom line is that they want their Capita complaint heard by FOS, not dealt with by the Capita / FSA deal.

    Are you seriously suggesting that we stop acting against our clients interests ?

    Also, just to make it crystal clear to the ill informed anonymous comment our firm is not on a contingency fee in relation to the FOS Capita complaint.

    Gareth Fatchett – Regulatory Legal Solicitors

  12. I have just come across this article from the 23rd June 2011.

    http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/8592774/FSA-warns-City-youre-on-your-own.html

    Reading between the lines it seems like an admission the FSA has turned a blind eye in the past/been powerless.

    I am at a loss to understand why, as an investor, I am expected to be accept the with the complete and utter white wash that this whole debacle has been from the outset.

  13. I Telephoned Invesco Perpetual to ask which directorships Neil Woodford has in companies outside of Invesco – ‘None it is not allowed’ was the response. By way of contrast when I looked on Companies House I found the attached document. I believe the Arch funds invested in this company.

    Companies House 288a(ef)
    for the record – Appointment of a Director or
    Secretary
    IIll III UIU IIIll IIll II Ill III Ill II
    XUGLLYX8
    Company Name: NICE GROUP LIMITED
    Company Number: 04696923
    Receivedfor filing in Electronic Format on the: 16/04/2008
    New Appointment Details
    Position: DIRECTOR Date ofAppointment: 18/02/2008
    Name: MR ROBIN FARRELL
    Consented to Act: YES
    Usual Residential Address: 17 BRADBOURNE STREET
    LONDON
    UNITED KINGDOM
    SW63TF
    Date of Birth: 17/07/1967 Nationality: BRITISH
    Occupation: DIRECTOR
    Other Directorships:
    06408190 ARCH REAL ESTATE LTD
    04543182 ARCH ADVISORS (UK) LTD
    05290378 ARCH GROUP (UK) LTD
    04296814 ARCH ASSET MANAGEMENT LTD 06008835 BMS FINANCE AB LTD
    Electronically Filed Document for Company Number: 04696923 Page: 1
    C310177 ARCH FINANCIAL PRODUCTS LLP 05622042 AFRICA INVEST LTD
    06376480 ARCH INVETSMENTS NOMINEES LTD 06236189 ARCH CRU SUCCESSION FINANCE LTD 06469464 BARON FINE GOODS LTD
    Authorisation
    Authoriser Designation: director Date Authorised: 16/04/2008 Authenticated: Yes (E/W)
    End ofElectronically Filed Document jbr Company Number: 04696923

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