Trade body IFA Centre has kick-started 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 them 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 against Capita.
The next stage will be to apply for a group litigation order to claim for losses incurred by execution-only investors, clients of discretionary managers, those whose losses exceed £150,000 and professional trustee investors.
These groups of investors are not covered by the regulator’s Arch cru consumer redress scheme, which began on 1 April, which requires advisers to review recommendations to invest in Arch cru where consumers opt in to the scheme.
Capita wrote to investors last month to remind them they have until 31 December to apply for a redress under a separate £54m payment scheme agreed by the FSA between Capita and depositaries HSBC and BNY Mellon in June 2011.
IFA Centre managing director Gill Cardy has criticised Capita for the way it has communicated the payment scheme and the latest net asset values of the Arch cru funds.
She says: “Averaging the return from all six funds to quote an average investor return is totally inappropriate, and ignores the fact that most investors invested at significantly higher incorrect fund prices. The 25 per cent of investors totally ignored by the ‘industry-wide’ redress scheme should refuse to accept that a return of 60 per cent of capital invested is somehow an acceptable outcome.”
IFA Centre announced its potential legal action against Capita in March.