Treasury financial secretary Mark Hoban has revealed the FSA forced Arch cru to change its marketing material before it collapsed.
Hoban was defending the proposed new power for the Financial Conduct Authority to be able to publicise the fact that it is taken action against misleading promotions at the latest meeting of the public bill committee last week in Parliament.
He said: “At the moment, if the regulator stops an advert, no one knows that it has, other than the advert being withdrawn. It is important that people are aware of what advertising has been stopped.
“Arch Cru was first identified because the FSA looked at its marketing material. Perhaps if the FSA had been able to publish the fact that it had looked at Arch Cru’s marketing material and had that market material changed, a message might have been sent to others. The power is, therefore, important.”
MPs on the All-party Parliamentary group for Arch-cru which has taken up the case of investors currently claiming compensation for losses in Arch cru’s collapse have attacked the fact the funds were advertised as cautious.
Calling for a public inquiry into the issue in November, the APPG’s co-chair Labour MP Tom Greatrex said: “There are up to 20,000 individuals in UK who have lost considerable sums of money often their pension funds through the collapse of the Arch cru investment funds. That was a fund advertised and marketed as being cautious that turned out to be anything but.”
Prime Minister David Cameron told Greatrex he would “look carefully” having an inquiry, but later rejected the idea.