MM Leader: FSA must boost Arch cru compensation deal

For the second time in recent months, politicians seem to be proving their worth in looking to hold financial regulators to account.

With large numbers of constituents angry about the compensation package agreed between the FSA and Capita, BNY Mellon and HSBC, MPs are not going to rest with the deal that has been put on the table.

The £54m compensation package is designed to ensure that, alongside distributions already made and remaining assets, investors receive around 70 per cent of their fund value when the range was suspended in March 2009.

Treasury financial secretary Mark Hoban repeated in Parliament the FSA’s assertion that investors can claim against their IFA to receive further compensation above the regulator’s agreed package.

A fair amount of bad advice may well have been given over the Arch Cru range. Commentators in Money Marketing and elsewhere had raised significant concerns about the concept of the “new asset class” private equity range being promoted by former Arch cru chairman Jon Maguire.

The FSA knows the adviser firms which sold Arch cru at significant levels and it is likely the quality of advice given by such firms has, or will, come under tough scrutiny. Some may face serious sanctions.

However, as the authorised corporate director, Capita had a responsibility for the range and should be prepared to play a bigger part in the compensation package.
The current arrangement has the feel of a behind-the-scenes deal designed to make life easier for the regulator rather than offer investors the compensation they deserve.

Investors looking to recover lost assets from an IFA are likely to face a tough battle, with firms fighting claims. It is understood a significant number of adviser firms that sold large amounts of the Arch cru range have ceased trading, so many claims will be passed to the Financial Services Compensation Scheme, penalising IFAs which stayed well clear of Arch cru.

We hope MPs continue to pressurise the FSA into increasing its package.

MPs scrutinising the draft Financial Services Bill should take careful note of the benefits to consumers of financial regulators facing proper Parliamentary accountability and look to ensure this is enhanced.


Coventry launches new residential and B2L deals

Coventry Intermediaries is launching a new range of residential and buy-to-let fixed, tracker and capped mortgages with no early repayment charges. The residential products include a tracker up to 65 per cent loan-to-value at base rate 2.25 per cent, which is capped at 3.75 per cent until December 31, 2014, and a tracker at base […]

Old Mutual appoints Paul Feeney

Old Mutual has appointed Paul Feeney into the newly created role of chief executive of asset management for the Old Mutual Long Term Savings division. Feeney is expected to join in early January, subject to completion of regulatory approvals. Feeney will be responsible for all the Old Mutual LTS asset management businesses in Skandia Investment […]

TSC backs ex-IMA chair Robert Jenkins for FPC

The Treasury select committee has backed the Treasury’s appointment of Robert Jenkins as an external member of the interim Financial Policy Committee. The interim FPC has been established to prepare the ground, in advance of legislation, for the creation of the FPC as the body responsible for stability of the financial system. The Chancellor made […]

Pensions Regulator warns of ‘hybrid’ scheme risks

The Pensions Regulator has issued a warning to trustees about the risk of governance failings in ‘hybrid’ pension schemes. Hybrid schemes contain elements of both defined-benefit and defined-contribution pension benefits. The regulator has published a statement designed to help trustees and their advisers understand the structure of hybrid schemes. TPR executive director of DC, governance […]


Guide: what you need to consider for your auto-enrolment project

In this guide, Johnson Fleming reveals what items you need to understand to gauge the impact of auto-enrolment on your business. The guide focuses on: the impact that your auto-enrolment scheme will have on you; assessing your workforce; understanding your staging date; reviewing your current provision; and modelling contribution levels and costs.


News and expert analysis straight to your inbox

Sign up


There are 2 comments at the moment, we would love to hear your opinion too.

  1. Joe Egerton - Justice in Financial Services 27th October 2011 at 11:56 am

    I cannot too strongly endorse your line. It is crucial that the spotlights are kept on the role of Capita. Only if Capita pays more can justice be done for both investors and advisers.

    those interested in joining our campaign can contact through

  2. “Agreed package”.

    Agreed behind closed doors.

Leave a comment


Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm