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IFA Centre kick-starts Capita legal battle for further Arch cru redress

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

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Comments

There are 5 comments at the moment, we would love to hear your opinion too.

  1. As the LBA to Capita is written on an open basis, I assume there is no copy suggesting people share and read: –

    https://www.box.com/s/gmsp943xfx6a2s7wicdp

    If you have clients who invested in these funds, you’ll want to ensure they join this action rather than try and claim against you. Moreover, too many clients are too decent to claim against their trusted advisers, and under the FS/CA scheme would go without(!) UNLESS they join this action.

    If you didn’t advise clients to invest in ARCH cru, but know investors in them anyway, its still in your interests (and your clients) to join this action: being compensated by Capita means the cost not falling on IFAs generally via the FSCS.

    And don’t let anyone tell you that Capita can only ‘afford’ the paltry redress scheme. It is unfeasible that such an organisation, with £hundreds of millions derived from public sector contracts, could use a legal technicality to avoid its financial services liabilities and still remain standing.

  2. Richard Wright 9th July 2013 at 10:03 am

    I thought IFA center was a trade body set up to represent IFA’s as an alternative to AIFA (as was). No Wonder Gill Cardy didnt have time to look at important issues I brought to her attention last year regarding RDR, she was obviously far too busy trying to become a consumer champion. Gill leave that to WHICH and the like and concentrate on your members interests!!

  3. @Richard Wright : I am sorry that you are unable to see why holding Capita to account for their failings would benefit the adviser community which is currently being asked to pick up the bill, whether they used the funds or not.
    The focus on investors underlines the fact that whether investors took advice or not, or whether that advice was good or not, their losses are just the same and just as real and should be addressed by CFML as the party resposible for causing those losses, not the advisers who are not.
    If this case succeeds you will I am sure find a little corner of your heart to be grateful – whether you are a member or not.

  4. @Richard. Are you a member of IFACentre? APFA? Been a member of Adviser Alliance, IFADU? Who is your SPS issued by? If you can confirm the above it would be useful before I respond.

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