The offer from Capita to Arch cru investors was a bit of a damp squib as the “numbers” element of the offer will not be sent until the October 31, 2011.
That said both investors and IFA firms have a great deal to think about. Immediately, the investors holding investments via a third party provider – such as a Sipp or wrap provider – are faced with receiving no offer at all as it will be sent to the “owner” of the investment. We have wheeled into action on this and asked our investor clients to seek confirmation from third party providers that the Capita offer would not be accepted without recourse to the adviser.
The next important issue is the way in which the FSA are exercising their powers to force FOS into capping their awards. This is probably the most controversial element of the Capita offer. It effectively takes the investor right to receiving a better option than the Capita offer away. This exercise of discretion is something which is being reviewed by our counsel. We take the view that in the absence of a proper explanation of the calculations and reasons, we are little further forward.
If we have an arguable case to put the matter to investors then we will. Whether we would receive the support to do this is another matter.
Another angle which needs to be considered is that a decent number of investors were advised by IFA firms who no longer trade. This opens up the option of the FSCS to eligible investors.
The interaction of the Capita offer with the FSCS is going to be tricky until we fully understand the position of the FSCS. That said, this approach brings the potential of a large FSCS levy for CF Arch Cru one step further.
When we started the campaign we had nothing to consider from Capita. It has taken the threat of 2500+ complaints and a lobbying campaign to get progress. I personally doubt that any money would have been made available if no pressure had been exerted.
70 per cent offer
It is natural that investors want to recover as much as possible. The lack of explanation by either Capita or the FSA creates suspicion that the deal is not open. It would be better for the FSA and Capita to explain their process. I doubt they will as they will tough it out.
Challenging the FSA
Investors cannot be put in a place where they risk significant downside risk if we take on the FSA. That makes no sense. Our initial step has been to write to IFA firms and see whether they would support a challenge to the way in which the FSA and Capita have put together the scheme.
We feel it right that IFA firms show leadership and commitment before we invite investors to join them.
There is a significant level of unhappiness with investors and IFA firms in relation to the way the FSA has gone about things. We have encouraged the writing of literally thousands of letters to MP’s. This has worked well. However, the time for talking and debating is over . The FSA and Capita have firmly thrown down the gauntlet to investors and their IFA’s.
I personally think the FSA / Capita secrecy has been highly unhelpful. A rational explanation of the offer may have been enough for some investors to settle with good grace.
There are more twists and turns in this matter and we may just take up the FSA / Capita challenge.