Trade body IFA Centre has kickstarted its legal challenge against Capita Financial Managers to secure redress for Arch cru investors who are not covered by the consumer redress scheme.
Law firm Harcus Sinclair has written to Capita, the authorised corporate director of the Arch cru fund range, to notify it of a claim against the company based on a sample of Arch cru investors.
Over 800 Arch cru investors have so far registered their interest in taking part in the litigation. The next stage will be to apply for a group litigation order.
Execution-only investors, clients of discretionary managers, those whose losses exceed £150,000 and professional trustee investors are not covered by the regulator’s Arch cru consumer redress scheme. The scheme began on 1 April and requires advisers to review Arch cru recommendations where consumers opt in to the scheme.
Capita wrote to investors last month to remind them they have until 31 December to apply for redress under a separate £54m payment scheme agreed by the FSA between Capita and depositaries HSBC and BNY Mellon in June 2011.
The letter says the estimated total return across the six Arch cru funds has fallen from 66 per cent as at September 2011 to 61 per cent as at March 2013.
IFA Centre managing director Gill Cardy says: “The 25 per cent of investors totally ignored by the ‘industrywide’ redress scheme should refuse to accept that a return of 61 per cent of capital invested is somehow an acceptable outcome.”
Aurora Financial Planning chartered financial planner Aj Somal says: “It is good to see IFA Centre fighting for extra compensation for all affected investors. A return of 60 per cent on the original investment sounds far too low.”