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.