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FCA begins Connaught compensation payments

UK-Currency-Money-Coins-700x450.jpgUp to £66m in compensation over the failure of the Connaught Income Fund is now on its way back to investors, the FCA has said.

In November, the FCA released a critical report on Capita Financial Managers Limited, the fund’s authorised corporate director, and agreed the settlement for investors who lost out.

However, a number of complaints over the FCA’s handling of the collapsed have been made to the Complaints Commissioner.

The adjudicator has decided not to uphold the complaints until after a third party has finished conducting its own review, which will be appointed once the FCA finishes its investigations.

The FCA said in a note yesterday: “The FCA welcomes the Commissioner’s decision not to uphold the complaint pending the relevant review by an external third party, which we have agreed to carry out.

“The public censure brought to an end the FCA’s investigation in relation to CFM. Other aspects of the FCA’s investigation into the operation of the fund are continuing. The FCA will normally publish the outcome of enforcement action.”

The Connaught fund invested in a number of high risk loans before it was suspended in 2012.

As MPs also reviewed the fund they asked questions on why advisers had recommended the unregulated investment, but many have argued that the blame has been unfairly shifted to the IFAs after the collapse.

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Comments

There are 4 comments at the moment, we would love to hear your opinion too.

  1. Why is the third party conducting this separate review unnamed and will its (eventual) findings be published ~ in full ~ for all (not least the TSC and other MP’s) to see and to debate in open forum? Or, as it did on another similar case, will the FCA seek to publish only a (heavily) redacted version with a view to obstructing/limiting the scope for criticism of its own failings?

  2. But advisers should shoulder some of the blame for their recommendations here too, of course. I have seen how this was peddled to certain (many) low-risk investors and it was not right. Advisers who should not have been advising on unregulated schemes were selling it too. I have seen advisers avoiding dealing with the matters as complaints even when their clients raised the matters as such as well and Professional Indemnity insurers not supporting advisers as they should never have been selling the stuff in the first place – what will be done about these rogues?

    • Philip, you are missing the point here by a very wide margin I’m afraid. The underlying problem here was fraud on a very large scale which should have been spotted by CFM.
      Had the fund been run and overseen correctly then these problems would never occured.
      How exactly do you expect Advisers to be aware of fraud in the underlying fund, surely that was CFM’s job?
      There are a lot of unanswered questions here the biggest one being why has it taken so long for the FCA (nearly seven years now) to reach these conclusions??

      • Because the longer it takes, the more the regulator’s failings become overshadowed by other aspects of the case, notably what a great job the FCA can now claim to be doing in terms of extracting from Capita £66m compensation for investors.

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