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MP sees serious shortcomings in Capita’s role

The MP who secured the Parliamentary debate on Arch cru believes there were “serious shortcomings” in Capita Financial Managers’ role as authorised corporate director of the Arch cru funds.

Speaking in the Commons last week, Labour MP for Rutherglen and Hamilton West Tom Greatrex said former Capita staff had told him there was relatively little oversight at the firm, with a small number of inexperienced staff working across over 300 funds.

Greatrex said: “Capita appears not to have known about the activity of the sub-funds investing in the very high-risk activity by the Guernsey cells. Capita appears not to have been aware of the illiquidity of the fund by 2008. Capita also appears not to have provided proper sign-off for the accounts. At the very least, it is apparent there were serious shortcomings in the role of Capita as ACD.”

He also said the £54m compensation deal agreed by the FSA in June between Capita, BNY Mellon Trust & Depositary and HSBC Bank seemed like “an admission of defeat”, with the FSA unable to work out what went wrong and why and where the liability was.

Alongside distributions already made and remaining fund assets, investors who accept the compensation package will get around 70 per cent of the net asset value of their funds as at March 2009 when the range was suspended.

Greatrex added: “The Treasury has been very clear that this is a matter for the regulator. But when the authorised corporate director fails, when the regulator misses what is happening, when the basis of a payment offer is so woefully inadequate, it becomes a matter for the minister. It becomes a responsibility of the Government to act to prevent or to minimise the risk of this ever happening again.”

Capita declined to comment.

MPs’ quotes from Westminster

“For investors not to have go through the anxiety and rank unfairness of losing in a high-risk gamble they were told was a cautious investment, something needs to change.”
Tom Greatrex, Labour and Co-operative MP for Rutherglen and Hamilton West, who secured the Arch cru debate.

“In criticism of the FSA, it seems hardly just that having failed in its responsibility to regulate, it has the responsibility to investigate and to negotiate a compensation package for the people that have been failed in the first place.”
Alun Cairns, Welsh Conservative MP for the Vale of Glamorgan, who has also worked to secure a Parliamentary debate on Arch cru.

“Government is pouring money down the neck of Capita and for it to say this is nothing to do with it would strike me and my constituents as remarkably detached and arrogant.”
Tristram Hunt, Labour MP for Stoke-on-Trent Central

“We keep coming back to why an investment advertised as safe and cautious and “ideal for pension transfer” has so damaged people’s lives. One has to move on to the simple question of how do we stop this happening again?”
Guy Opperman, Conservative MP for Hexham

“Capita and all the bodies involved in this issue should realise their reputation in the UK is at stake by their handling of this dispute.”
Duncan Hames, Liberal Democrat MP for Chippenham

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