Aifa has attacked the FSA’s justification for its £110m Arch cru consumer redress scheme, saying its misuse of a statistician’s report fundamentally undermines its case.
In April, the FSA published a consultation paper proposing plans for the redress scheme. It said it had identified 795 firms that sold Arch cru funds.
However, a statistician’s report the FSA commissioned to establish the scale of misselling estimated only 321 of those 795 firms sold Arch cru funds on an advised basis. The report, which was included in the consultation, estimates 83 per cent of those 321 firms had “substantially missold” the products, based on a sample of just 24 firms.
Aifa policy director Chris Hannant says: “The FSA’s misuse of numbers suggests it wants a redress scheme and is trying to find the numbers to support this. It needs to have a hard look at this and think again.
“Even if all of the 795 firms had missold that would not represent widespread misselling, a requirement for a redress scheme.”
Foot Anstey head of financial services Alan Hughes says: “It looks like the FSA decided what it wanted and worked back from that.”
An FSA spokeswoman says the regulator will review Arch cru adviser numbers in light of the consultation. She says: “It has emerged some firms sold them on an execution-only basis or not at all, while we found other firms not on the list were selling Arch cru products.”
Anand Associates managing director Bhupinder Anand says: “This is typical FSA, picking out random figures to suit its own ends rather than going on the facts.”