An MP has attacked the FSA for “passing the buck to IFAs” in its structure of the £54m Arch cru compensation package, saying the regulator’s approach is “wholly inadequate”.
The FSA announced in June it had agreed the £54m fund between Capita, BNY Mellon Trust & Depositary and HSBC Bank to make payment to eligble CF Arch cru investors. Investors who accept the compensation deal will still be able to make a claim against their IFA.
Speaking at a Parliamentary debate on Arch cru last week, Welsh Conservative MP for the Vale of Glamorgan Alun Cairns said: “Passing the buck to IFAs is wholly inadequate. The FSA has told me the obligation of suitability lies with the IFA. But it is unrealistic for IFAs to have the capacity to interrogate all marketed funds and products individually or their pricing strategy or to speak to the financial directors or auditors of every firm on which they advise on when the FSA with all of its resources failed to protect against the wrongdoing in this respect.”
“IFAs cannot be excluded from any part of the responsibility but we need to bear in mind the context in which IFAs were working. If they are looking at the strategy and pricing of a fund that is classified as cautious managed, we need to recognise that context. Therefore, the failure of the FSA to set the right context in which an IFA can make recommendations is fundamental to the issue.”