The FSA has announced a £54m compensation package for CF Arch cru investors.
The FSA, Capita Financial Managers, BNY Mellon Trust & Depository Ltd and HSBC Bank have all agreed the £54m fund, which will be used to make payments to the eligible investors in the CF Arch cru Funds.
Investors will be given a choice of whether to accept the payment scheme. The FSA says that if investors do accept the payment will be in full and final settlement of any claims and settlements of any claims or remedies they may consider they would otherwise have against the firms. The FSA says the package will accelerate returns to investors.
In a letter dated June 16, seen by Money Marketing, Prime Minister David Cameron told a constituent he would increase the pressure on the FSA if it does not present more information to investors by the end of June.
In the letter, Cameron says: “Several constituents have questioned the FSA’s handling (of the CF Arch cru) matter. In particular, people feel that the FSA has provided little or no guidance to investors. On investigation, the FSA said that it intends to publish more information before the end of June. If this does not happen, I would be happy to put further pressure on the FSA to communicate with investors.”
The FSA says that when added to the distributions already paid to investors and the value of the remaining assets of the Arch cru Funds, the payment scheme should mean that investors will receive a total sum which represents a significant proportion of their investment. This is currently estimated to be on average about 70 per cent of the published net asset value of the Arch cru Funds as at the suspension of dealings on March 13, 2009.
The FSA is still considering the role of other parties in relation to the Arch cru Funds.
The FSA says details of how the payment scheme will work are being finalised. This includes the FSA discussing the payment scheme with the Financial Ombudsman Service with a view to the FOS following the rules of the payment scheme when considering any complaints made by investors to the FOS against the firms in relation to the Arch cru Funds. CFM will be administering the payment scheme and will be contacting those investors who are invested in the Arch cru Funds as at May 31, 2011 with further information before the end of August 2011.
Earlier this month Conservative MP Alun Cairns announced that he was to bring the CF Arch cru case in parliament. Cairns, who said he represented seven constituents in the affair, said he received hundreds of complaints from disgruntled investors after he showed concern over the collapse of the £400m CF Arch cru fund range.
He said: “My aim is to raise the awareness of cru. It’s totally unacceptable – 20,000 investors have waited two years with no information.We need to intensify the pressure on both the FSA and Capita. The debate will require the Government to respond with its view on what happened.”
Capita has released a statement which acknowledging the agreement, but says it is not an admission of liability, and that there portion of the package will be covered by the £30m provision made in the 2009 accounts. The firm also states that no fine will be imposed on them by the FSA.