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MPs back Arch cru legal battle

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Anne Begg

A proposed legal action against Capita Financial Managers for its failures in supervising the Arch cru funds has won the backing of influential MPs including George Galloway and Anne Begg.

Trade body IFA Centre held a briefing with MPs, advisers and investors last night at the House of Commons into the collapse of Arch cru funds. The fallout from Arch cru has seen up to 20,000 investors lose out after the £391m fund range was suspended in March 2009.

IFA Centre began compiling a legal case against Capita Financial Managers in March on behalf of Arch Cru investors who are not covered by the FSA’s consumer redress scheme.

At last night’s briefing, Respect Party MP for Bradford West George Galloway, who chaired the meeting, said: “I know injustice when I see it, and this to me seems like an obvious injustice.

“Capita has not lived up to its responsibilities on this, and neither did the FSA. In my view Parliament must now force them to live up to those responsibilities.”

MP for North West Norfolk Henry Bellingham said the complex construction of the Arch cru funds “certainly amounts to recklessness and is tantamount to fraud”.

Anne Begg, MP for Aberdeen South, told of an adviser in her consistency who recommended clients invest in Arch cru. She said: “The adviser is furious as he is now being told he should have been selling this as a risky product, but the FSA was only saying it was risky after the event. He thinks the FSA should have put out a written warning if there was a problem with this particular fund.

“The regulator is expecting IFAs, who do not have the resource it has, to spot something they themselves were not able to spot.”

But in a surprise move, MP for Hexham Guy Opperman, the secretary of the Arch cru all-party parliamentary group, warned investors they may be better off accepting compensation from Capita under the £54m payment agreed with the FSA in June 2011.

Opperman warned the IFA Centre’s legal battle hinges on whether Capita Financial Manager’s parent company Capita Group would accept legal responsibility over what went wrong.

He said: “If you are able to pull this off you will have the thanks of everyone here. But the legal reality, certainly of everybody that we have consulted thus far, is that it is that minute, smaller part of Capita, which is a totally responsible for these investments and the management.”

Opperman said he did not want to diminish IFA Centre’s efforts, but also did not want to get investors’ hopes up “unduly”.

He said: “I can assure you there is no way the FSA or any Government would have necessarily taken a discounted sum when another amount was a realistic possibility, and unless they had very strong advice themselves.

“The vast majority of evidence shows most of these cases when they go to litigation take a minimum of three years and a maximum of between five and 10 years. That is the choice people are facing. The decision comes down to the lesser bird in the hand and the prospect of a larger offer.”

In response Galloway said: “Guy implies the FSA did this deal with Capita on the basis that there would be a struggle to get more money for investors. I, as a more sceptical type think the FSA was toothless, gutless and was not prepared to take on a bigger financial organisation.”

IFA Centre managing director Gill Cardy says: “The solicitors would have told us by now if we did not have a snowball’s chance in hell with this case, that there was no prospect of success, no nothing. There is a huge amount of time and money that has gone into this. I simply do not accept that would have happened and that we would have taken all these steps in putting the case together if there was no chance of success.”

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Comments

There are 6 comments at the moment, we would love to hear your opinion too.

  1. Well I may have reservations about George Galloway but he is bang on the money here and maybe I need to review my opinions. The FSA is stitching up the adviser community and massive injustice is being committed.

  2. MPs backed a parliamentary debate on RDR.
    Result?
    The FCA is more powerful than government. Don’t hold your breath.

  3. Paul MiTodger 16th May 2013 at 3:10 pm

    If Andrew Tyrie couldn’t force the FSA to do the right thing what hope has George?

    Forget rights and wrongs it’s all about absolute power corrupting the numpties.

  4. Maybe if more advisers had bothered to make the effort to turn up and support the cause then it may have had greater effect on the MP’s that were present, not withstanding this, the numbers were good the clients who invested put their message across and its time the whole adviser community got behind Gill as it is every IFA who is going to pick up the bill, via FSCS levies!! – All MP’s are being sent a transcript of the meeting, so they will know about it – go and pester them for government action!!

  5. @Mr G
    What government action
    Andrew Tyrie & Mark Garnier have already told us that they cannot over rule the FSA?FCA
    Sants told them an act of Parliament would need to be passed before he would be required to comply with any request.
    Hence his utter contempt of the TSC
    You must be getting britain confused with a democracy.

  6. If any investors are following this and are not yet aware of the legal action taking place against Capita, please go to http://www.archcruclaims.org to read about our action. QC opinion has been sought and funding secured to take this case to court so investors do not have to pay court costs and we are insured against costs if we were to lose the case.

    The action is led by investors who have formed a Steering Committee. All details are on the website.

    IFAs are encouraged to look into this for their clients if they have not already done so and many IFAs have already done this.

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