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George Galloway calls on MPs to back Arch cru EDM

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MP George Galloway has tabled an early day motion calling on the Financial Conduct Authority and Capita Financial Managers to accept responsibility for the collapse of the Arch cru fund range and to pay full investor compensation.

Galloway, Respect Party MP for Bradford West, has been working with trade body IFA Centre to highlight awareness among MPs about the fallout from Arch cru, which has seen up to 20,000 investors lose out after the £391m fund range was suspended in March 2009.

The motion, tabled yesterday, reads: “That this House condemns the failure of Capita and the FCA to fully compensate the 20,000 or so innocent people affected by the suspension of the UK authorised and regulated Arch cru investment funds.”

The motion says investors were told Arch cru was a low risk investment, and argues Capita, the authorised corporate director, was responsible for failures in oversight of the funds.

It goes on to “demand that the FCA act on its own handbook rules and enforce the remedies set out therein on Capita to compensate investors; and calls on the Chancellor of the Exchequer and the Financial Secretary to the Treasury to act immediately to ensure such failures in financial regulation are never repeated.”

Early day motions are a vehicle for MPs to raise awareness around particular issues, and in rare cases can pave the way for parliamentary debate.

IFA Centre is encouraging advisers and affected investors caught up in the Arch cru collapse to contact their MP and invite them to back the motion.

The EDM follows an MP briefing held by IFA Centre last month setting out what had gone wrong with Arch cru.

IFA Centre managing director Gill Cardy says: “A number of MPs and parliamentary assistants attended the House of Commons briefing and were concerned about the situation in which many Arch cru investors find themselves. Tabling the EDM is a natural way for Mr Galloway to continue to raise awareness of the unrecovered losses incurred by his constituents as well as thousands of other investors.”

Galloway says: “I am not alone in having constituents affected by the failure of the Arch cru funds and the failure of the regulator to ensure that all investors in the funds obtain compensation for their losses, including those left out in the cold by the FCA’s inadequate redress scheme.”

Capita was censured by the FSA in November for “serious failings” in the way it oversaw the funds. It escaped a £4m fine as parent company Capita Group contributed £32m to a £54m payment scheme agreed in June 2011 to compensate Arch cru investors.

A separate consumer redress scheme began in April where advisers who recommended Arch cru have to write to clients to ask them if they want to have their advice reviewed. The regulator estimates the scheme will deliver between £20m and £40m in redress.

IFA Centre is looking to bring a legal challenge against Capita on behalf of Arch cru investors who are not covered by the consumer redress scheme.

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Comments

There are 20 comments at the moment, we would love to hear your opinion too.

  1. Love him or hate him, you have to salute his courage, his strength, his indefatigability.

  2. Might not like who Gill get’s into bed with, but can’t deny she gets results. Quite an achievement getting this far.

  3. What’s the point?
    look at all the MP’s who turned out for the TSC RDR hearing.
    Result – Nada.

  4. Like what’s the point of killing yourself under the King’s horse at the Derby?? Oh yeah – women’s suffrage – no 5 minute victory – but they won in the end.
    Anyone been to the cinema to watch The Lorax??
    “Unless someone like you cares a whole awful lot, nothing is going to get better, it’s not.”
    Things change … and they change when enough people refuse to say “what’s the point?”.

  5. Richard Bishop 13th June 2013 at 6:14 pm

    I think Mr Anon is making the point MPs have no power or influence over the FCA.

    Throwing yourself under a horse might gain some attention especially if you did it with the nut case Galloway.

  6. Willie Crockett 13th June 2013 at 7:26 pm

    Was it not the Adviser’s responsibility to ensure that the investments recommended were suitable for the risks each client was prepared to take?

  7. The woman who threw herself under the horse died. The act was of no benefit to her.

  8. Richard Bishop 14th June 2013 at 8:52 am

    @anon good point and glossed over. The IFAs sold this rubbish and many are now paying for that mistake.

    All are to blame and should pay compensation.

  9. Well done Gillian for what you are attempting and for what you may or may not achieve and for having the gumption to actually do anything.

    Doing nothing and complaining about everything appears to be a trait of this industry and those that are most cowardly and the most serial of offenders in this regard post using no name.

    A concerted lack of cohesive response to any issue in this industry is why the FCA lord it over all of us with no fear of, concern for or regard to anyone in what they do.

  10. Oh right – and I’m not an IFA so what benefit is it to me to head up this fight?? It’s a good job that not everyone is so self-interested.
    MPs makes the laws which the FCA enforces. They hold the regulator to account via the Treasury. Just because you may think they haven’t in the past does’t mean we – yes, WE – should give up trying.
    If every adviser had given perfect advice which perfectly reflected the risks that their clients were prepared to take CFML broke the rules – as set out in the FSA enforcement notice in November – and the rules state that they should put the investors back in the position theywould have been in … and the FSA chose not to enforce their own remedies set out in their own rule book and instead placed everything back onto the advisers.
    If you are happy for every provider mistake or rule breach to fall back on the adviser community because they were the ones closet to the investors then you’ve forgotten Morgan Grenfell and you’ve forgotten Standard Life Sterling Pension fund – and you’re more generous with your will to pay FSCS levies for this and any other similar future event than I could ever have imagined.

  11. Anon @ 9.19
    It is not a concerted lack of cohesive response that allows the FCA to lord it over us. It is the fact that the FCA is unaccountable and parliament refuses to rectify this situation. You can have all the Mps in parliament calling for the FCA to do any number of things but the FCA can tell them to get lost. Parliament gave them the power to do so.

  12. Sorry,

    Meant to post Anon 9:19am under my name.

    Not as perfect as i thought I was eh!

  13. Galloway was brilliant on Question Time last night!

  14. Arch Cru is the tip of the iceberg. Please forward Gill’s notes to your own MPs and to any clients affected in order that they involve their MPs. The FSA/FCA must be accountable going forward. The only way to achieve some future control of those lying scumbags is to embarrass the Treasury into action to question the FCA. This EDM is a great opportunity, but only if it is supported. The only way to return confidence to our sector is to clean up our industry. The starting point must be a regulator with high ethical standards that is accountable to ALL stakeholders.

  15. Alasdair Sampson 14th June 2013 at 10:13 am

    Well done, Gill. You have achieved what no-one else has in this debacle – MPs actually listening.
    You are gaining traction. Keep at it.

    And others shouldn’t be tempted to knock George Galloway – outspoken and flamboyant he may be but others notice and listen. Did any of you watch the attempt of the US Senate Committee to fillet him over the Iraq sanctions etc? He stood up top to their power and collective might and frankly wiped the floor with the lot of them.

    I don’t agree with his politics. I never have and never will. But I Respect the man for having very big cojones. George won’t let this go.

    Don’t listen to these dismal Jimmies who bleat about there being no point in arguing this case.

    There was no point in the overwhelming majority of the East Germans who tried to get over, under or round that Wall but they kept doing it. The Wall eventually came down.

    Why?

    Because eventually sufficient people took sufficient heart from the courage of the few and decided to stand up collectively and say Enough is Enough, and they took it down themselves with their bare hands.

    It is a nonsense to say that the reason IFAs get a constant kicking is that FCA is not accountable. Easy always to blame someone else.

    The main reason the IFA community gets such a kicking is down to the fact that you are too self-interested to consider never mind see the benefits of developing a collegiate structure of a true profession. If you did and if you spoke with one voice and did so consistently, your voice would be listened too.

    You people really should be giving Gill a bloody medal for doing what she is doing – not carping on the way you do.

    I think you are doing a damn fine job.

  16. There’s a lot wrong with George Galloway, but his tendency to cut through the fluff and get to the heart of the matter is one of his redeeming features…and if ever that skill is needed, its when tackling regulatory failure like this.

    Capita is a large organisation drawing £100ms of its revenues from Public Sector contracts. Its now bidding to become one of the preferred suppliers in the Criminal legal aid reforms, and if that’s not ironic enough, also provides outsourced services to the FSCS(!). This is a Group that should pay its way and I rather doubt it would earn these contracts if it made clear that in the event of some catastrophe, it would hide behind the limited liability of a subsidiary.

    There are some briefing papers for MPs put together by Gill Cardy of IFA Centre and these are well worth sending to one’s MP if you’ve not already done so.

  17. ….if you spoke with one voice and did so consistently, your voice would be listened to”
    Utter nonsense Alasdair.
    If the FSA did not listen to Andrew Tyrie and the TSC the FCA will not listen to us and you know it. They are an unelected, unaccountable quango with such far reaching powers, they are an affront to democracy and the rule of law.

  18. @those who say “What’s the point?”. look at history as Alistair pointed out with the Berlin Wall. There are many examples if lost causes for the individual and personal sacrifice benefitting others and restoring the rulke kof law and fairness. Unfortunately sacrifices have to be made to do that and a willingness to put principle above personal interest.

    I joined the TA during the cold war and knew we,d probably not even get to France, let alone Germany without being hit with persistent nerve agent at the ports. Even if we made it that far, we’d probably get hit with a battle field nukeornin persistent nerve agent and would die in Germany. I served for 16 years and so the fall of the Berlin Wall and the wholeWarsaw pact. The vacuum then resulted in idiots deciding that Islam was a good excuse for re-armament so I left the services as my willingness to sacrifice my future would be if no benefit to my family, my country or the Middle East and as Iraq now shows this was a mistake which has destabalised the whole’ middle east and Islamic world.
    So you don’t have to fight to win, yoiu just have to fight to bloody someone else’s nkee and make them rethink. It doesn’t matter that the FCA thinks it is untouchable as nobody is untouchable as Ronald Reagan, Aire Neave, Lord Mountbatten, Thomas Becket, Watt Tyler, John Paul 1st & Kennedy prove.

  19. To anonymous I say that other agencies rated these low risk investments. To Richard Bishop I say I recommended against investing in this fund. So how am I to blame and why am I now having to compensate those who chose not to consult me? I suppose when I am the last IFA in the country I will compensate everyone for everything and nobody will have any responsibility for their own actions.

  20. Clearly the level of support is building and that is very encouraging. Nevertheless one may be incredulous at the numbers of IFAs who either don’t want to know, assume this is merely a PR exercise for Gill Cardy, or who simply throw up their hands in despair.

    These IFAs do not seem to appreciate the many factors surrounding the Arch Cru case. Even if they do not care about the IFAs who did sell Arch Cru there are many other things which they should be concerned about. For example:
    – you may care about the considerable number of investors who cannot benefit from the redress scheme.
    – you may care about the reputational risk to the independent financial adviser industry.
    – you may care about the payments you will be forced to make to the FSCS, regardless of whether you recommended Arch Cru or not.
    – you may care about the likely increase in your future PI premiums
    – you may care about regulated companies which produce products purporting to be something they are not.

    Make no mistake, the damage both to the IFA and asset management industries from Arch Cru is colossal and if this is not addressed and dealt with now it will happen again. The IFA industry is already under enormous pressure from RDR and it is up to that industry as a whole to demonstrate that it can and does behave responsibly.

    There are many concerns that FCA is bullet proof and cannot be attacked. Although taking on FCA within the bounds of its own rule book will not work ( as has been clearly demonstrated by all the failed efforts so far), FCA does not have jurisdiction in a case mounted through the courts.

    There are also concerns that the George Galloway or for that matter any other MP driven initiatives may not get anywhere. In isolation you could well be right but whatever you think of George Galloway, he can and will make waves. That is what is needed.

    What you need to do therefore is write to your MPs and throw your weight and the weight of your investors behind the Harcus Sinclair action. Once that action is underway ( and bear in mind that HS already have positive Counsel’s Opinion behind them), then MPs will have no option but to give their support.

    As one commentator noted, MPs have no legal control of FCA, but the courts do; and if the case is successful and backed by substantial numbers from Parliament, then we may achieve the result we want.

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