Arch cru investors have challenged the FSA on why it set up the £54m compensation package between Capita Financial Managers, BNY Mellon Trust & Depositary and HSBC without consultation.
The FSA agreed the compensation deal between the three parties in June, which should see Arch cru investors who accept the package receive around 70 per cent of the net asset value of their funds when the range was suspended in March 2009.
Regulatory Legal sent a pre-action protocol letter to the FSA, Capita, BNY Mellon and HSBC last week, ahead of a planned judicial review of the compensation package on behalf of 2,700 Arch cru investors.
The letter, seen by Money Marketing, claims the compensation scheme does not meet the requirements of a consumer redress scheme under the Financial Services and Markets Act.
It says: “The essence of a consumer redress scheme is a system of rules adopted and operated by firms to determine fair levels of compensation after an extensive period of formal public consultation.
“The payment scheme that has been set up has none of the characteristics of openness, consultation or transparency. It represents a take it or leave it binding offer to the public to pay compensation, according to a formula agreed in private between the FSA and the three firms.”
Regulatory Legal also argues that investors are being forced to apply for redress without knowing whether they would achieve better results through civil court proceedings.
The FSA declined to comment.