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MPs to quiz FSA over Arch cru package and IFA liability

MPs will quiz the FSA next month on the size of its £54m Arch cru compensation package and the fact investors will be left having to claim against their IFA.

This week, Labour MP Tom Greatrex and Conservative MP Alun Cairns revealed they plan to lead an all-party Parliamentary group to lobby for 100 per cent compensation for Arch cru investors. This follows last week’s Parliamentary debate about the FSA’s compensation package, agreed between the regulator, Capita Finance Managers, BNY Mellon Trust and Depositary Ltd and HSBC Bank in June, which states anyone taking compensation must accept it as a full and final settlement against the firms.

Alongside distributions already made and remaining assets, investors should get back 70 per cent of their investment when the range was suspended in March 2009. Investors who feel they were missold the fund can pursue further claims against their IFA.

The FSA has agreed to meet with MPs on November 23 to discuss its stance on redress for Arch cru investors.

Parliamentary group co-chair Greatrex says: “It is unfair for IFAs to be landed with this. Everything I have seen points to the problem being elsewhere and IFAs are probably in the worst position to pay redress.”

Conservative MP and the group’s secretary Guy Opperman says: “This was marketed as a safe, cautious fund ideal for a pension transfer. I fail to see what IFAs have done wrong. If the FSA thinks IFAs are to blame, it must explain what the basis of that is.”

An FSA spokeswoman confirmed the meeting but declined to comment further.

Dennehy Weller managing director Brian Dennehy says: “The firms involved in the compensation package should admit they messed up and pay the whole bill.”

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Comments

There are 11 comments at the moment, we would love to hear your opinion too.

  1. I absolutely endorse the MP’s decision to challenge the FSA to explain why hardworking, best intentioned IFAs should have their Professional Indemnity insurance mis-used as the backstop for the FSA and Capita’s failure to regulate these funds. That this possibility is open at all is down to how legislation was somehow framed to cause it to happen.

    In fact, since MP Guy Oppenheim mentioned the words, “Independent financial advisers may be being criticised, but is my hon. Friend not surprised that the Serious Fraud Office has not been more involved in this patently criminal investigation?”

    IFAs are now having their Professional Indemnity terms amended so there is no indemnity bucket for the FSA to see raided. The cost of the non-compliance will now fall entirely on the IFA.

  2. If Alun Cairns along with Tom can sort this mess out, he gets my vote in the future, even if it does mean my late staunch Plaid Cymru supporting family turning in their graves! We really do appreciate your support with this potentail career threatening position gentlemen.

  3. Regulatory Legal have emailed all investors this morning with a draft letter to MPs and Capita. They have done the basic work but we all need to personalise it and put it in the post! Clearly the letter writing is having an impact.

    We all need to get behind this and see what pressure we can put on Capita and the FSA to improve this offer. If we all stand together we have a much better chance to improve the Capita offer.

  4. Whilst I am all for any attempt to get the FSA to explain their stance & be held accountable it will all end as usual with Hector Sants simply saying they are not accountable to anyone least of all parliament & the FSA viewpoint is if you don’t like it you can lump it.

  5. I congratulate the MPs on their stand but they will need to be VERY strong with the FSA otherwise they will get the same treatment as the TSC – two fingers from Sants!

  6. Laudable efforts by MP’s, but it will probably have the same result as a mouse asking for his cheese back, when the thief is Genghis Khan.

  7. So who pays?

    If the products and the advice are flawed who pays? The taxpayer? No thanks.

  8. I know it is an uphill struggle, no one thinks that the FSA and Capita will just change their minds because we ask them to. If, however, we do nothing then we can be assured of the outcome – that which the FSA and Capita give us.

    For the effort involved we have to give it a go.

  9. Exasperated me.

    Capita, BNY Mellon and HSBC are the main ones at fault and being pursued for proper compensation, not the tax payer. Though doubtless those who have managed to accrue money to invest have been taxed at every turn along the way.

  10. The more I thought about Hoban gleefully telling MPs that clients could sue their IFAs for unsuitable advice if they weren’t satisfied with the package…. along with hearing that the FSA just keep telling MPs in meetings that it was IFAs who are responsible for the advice to invest… actually the more angry I’m getting.

    I really, really hope common sense prevails, but I fear that Sants will just use this as yet another opportunity to dig his heels in the sand and tell MPs to go do one….and let IFAs take the blame and pay redress, like we all had to do over Keydata.

  11. Yes, the problem with the FSA is they STILL think they’re above the law and not accountable. Even after they lost in the high court over the use of legally privalliged information.
    They will continue to tell MPs to get lost. I think when the FSA is finally replaced, the new authority should not be able to employ ANYBODY that worked for the old regime.

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