Arch Cru - up to date info needed please

joyfull

Firstly, please reply in 'easy to understand' jargon-free explanations, I'm a novice!

I've read the older threads re. Arch Cru & have some questions.

My (very elderly) Mother's Financial Advisor invested approx £400,000 (of 2 trust finds) with them having been instructed (by the trustees) to invest low - medium risk. It's only in the last week we have heard about what's happened (loss of 40% & remaining funds not released yet. We heard this from the trustee of the trust funds, the IFA has not even been in touch. To cut a long story short we will complain & try & claim to recover the lost funds (as I gather are many others in a similar situation).

I'm interested in hearing about others in this position and any progress they have made with complaints / claims. (I've read, when I googled Arch Cru, there has been a successful claim in these circumstances already).

I've also read the remaining funds could be locked up for between 3-5 years. Our trustee seemed to think money would be available in months. Does anyone know?

Many thanks.

edit - My Mum, not the IFA is 'very elderly'!

dunstonh

(I've read, when I googled Arch Cru, there has been a successful claim in these circumstances already).

No there hasnt. That initial successful complaint was later overuled. Although it was on a technicality.

Basically, the fund was marketed as cautious but it wasn't. The failure of the fund is not grounds for complaint. If it doesnt match the risk profile then that is where most complaints are going to be successful.

Most IFAs avoided this fund (less than 1000 advisers apparantly used it out of the 30,000 out there). It couldn't be justified if you researched it because too much of the fund data was not disclosed. So, there was no way to ascertain the risk other than to rely on Cru. So, the ones that did recommend it have potential issues when dealing with complaints. I have little sympathy for them as there were plenty of warnings issued and it wasnt difficult to tell in advance that there were issues.

I've also read the remaining funds could be locked up for between 3-5 years. Our trustee seemed to think money would be available in months. Does anyone know?

No-one does know. However, its not likely to be months but 1-2 years. It will also arrive in dribs and drabs as bits are sold off.

jamesd

joyfull, as the investments within the funds are sold the plan is to return the proceeds to investors. For parts of it that will take years. One interim payment was made on 28 February and more are expected in July and December. Amounts and perhaps payment schedules will depend on the specific investments used.

You can read letters from Capita if you'd like to follow things in more detail.

You might also find this story about one of the investments, a shipping company, of interest. A global economic recession normally greatly hurts the value of shipping companies because trade and hence shipping drops and causes a large excess supply and greatly reduced shipping prices. As the world economy improves, so do the companies, so the plan for that investment seems to make sense rather than selling near the bottom of the market.

dunstonh

I just had a PM from someone accusing me of using hindsight in my post and that there was no way you could know in advance it was going to fail. For the record, I posted on the thread below (post 5) on 4th Oct 2008 (long before the fund was suspended).

https://forums.moneysavingexpert.com/discussion/1198673

joyfull

dunstonh wrote: »

No there hasnt. That initial successful complaint was later overuled. Although it was on a technicality.

Basically, the fund was marketed as cautious but it wasn't. The failure of the fund is not grounds for complaint. If it doesnt match the risk profile then that is where most complaints are going to be successful.

Most IFAs avoided this fund (less than 1000 advisers apparantly used it out of the 30,000 out there). It couldn't be justified if you researched it because too much of the fund data was not disclosed. So, there was no way to ascertain the risk other than to rely on Cru. So, the ones that did recommend it have potential issues when dealing with complaints. I have little sympathy for them as there were plenty of warnings issued and it wasnt difficult to tell in advance that there were issues.



No-one does know. However, its not likely to be months but 1-2 years. It will also arrive in dribs and drabs as bits are sold off.

Many thanks for the replies.

When you mention 'potential issues', are you saying there may be grounds for complaining & claiming against the IFA?

I feel totally out of my depth here & want to avoid a lengthy roller coast of hope/hopes dashed in any quest to retrieve something from all this,.

Rollinghome

It hardly needed much hindsight, it whiffed from the outset. The only reasons for any adviser to sell a fund like that would be total incompetence or, more likely, because it paid advisers double the usual rate of commision. Hard to see why the IFA shouldn't be culpable.

dunstonh

When you mention 'potential issues', are you saying there may be grounds for complaining & claiming against the IFA?

Yes. As I posted back in 2008, Cru were not disclosing the full asset make up of the fund. So, how can an IFA research and give advice on the basis of it being cautious if they dont know what x% of it is invested in.

The IFA may reply that it was in the cautious managed sector and was marketed as a low risk fund and its Cru and the IMA to blame. However, the IFA has the liability for the advice they give and you cant rely on marketing as being suitable to back up advice.

I would disregard the comments by rollinghome on the commission as being the reason it was recommended. As I understand it, most of the investments were held on platforms where the commission was rebated and a flat charge taken irrespective of the investment. So, the adviser got the same regardless of what they did. The ones I have seen and heard about all seem to be recommended by chartered financial planners who were wined and dined by Cru and were basically sold to on how good it was and they believed it. No malice or hidden agenda. Just incompetence and bad luck. However, irrespective of the reason they may have, it has no impact on the complaint.

Cru certainly are to blame morally but it is the IFA that suffers the liability if they recommended it as a cautious investment. If it was recommended as a medium risk investment, then its less likely to succeed in a complaint.

Rollinghome

dunstonh wrote: »

Cru certainly are to blame morally but it is the IFA that suffers the liability if they recommended it as a cautious investment. If it was recommended as a medium risk investment, then its less likely to succeed in a complaint.

As an IFA yourself it doesn't surprise me that you seem to think the moral blame lies entirely with the managers and not with those who were paid to advise. Because that's what customers naively expect from IFAs: advice, often not realising that 99% of IFAs are ex-salesmen of some kind with only very basic qualifications.

IFAs could earn 4% initial plus 1% annual renewal commission for selling that fund, which was double the normal trail commission on UTs (and compares with just 0% initial and 0 - 0.25% trail for selling a tracker fund).

"Investors faced a 6% initial charge on entry, with up to 4% payable to the adviser as commission and an annual management charge of 2.3% giving 1% trail to the adviser." http://webcache.googleusercontent.com/search?q=cache:WYxyVNC7KLUJ:83.217.99.68/adviser/-/news/collective-investments/content.aspx%3FID%3D350332%26ViewFull%3DTrue+arch+cru+1%25+commission&cd=14&hl=en&ct=clnk&gl=uk or http://www.theintelligentinvestor.co.uk/2009/04/premier-cru-or-vin-de-table-arch-cru.html

Simon Lewis, chartered financial planner with Partridge Muir & Warren, certainly thinks the unusually high commission was a factor:

From http://www.dailyfinance.co.uk/2010/02/18/cru-funds-fiasco-proves-a-point/

Simon Lewis, chartered financial planner with IFA with Partridge Muir & Warren says it is worrying so many advisers saw fit to put clients into Arch Cru funds.

Poor advice

"You have to question the quality of this advice. When we looked at the Arch Cru portfolio, we decided we wouldn't touch it with a barge pole. There was money in unquoted shipping companies and I just cannot see why you would want to put clients' money into unquoted companies. These funds just weren't transparent and were certainly not low risk."

So why did advisers put client money in Cru funds? A mixture of clever marketing and high commission payments, according to Lewis.

Cru's prom DVD to advisers: http://www.citywire.co.uk/adviser/-/news/collective-investments/content.aspx?ID=379032

dunstonh

As an IFA yourself it doesn't surprise me that you seem to think the moral blame lies entirely with the managers and not with those who were paid to advise. Because that's what customers naively expect from IFAs: advice, often not realising that 99% of IFAs are ex-salesmen of some kind with only very basic qualifications.

You really are pathetic. You pick and choose what you want to read and then manipulate it to make comment in response to something I didnt say. When I was looking up an old Arch Cru thread it was not a surprise to see anther poster make exactly the same accusation of you on that thread as well. Your ignorance does not surprise me as we have got used to that here and I know you only do it to try and wind me up but its not fair on joyful who is after help and does not you posting troll like comments which do not help.

It is quite clear from my posts that I have said the advisers were wrong but also the provider was wrong as well. However, it wouldnt have mattered if I said the grass was green as you would still accuse me of saying it was red.

Please provide evidence to back up your made up stat.

IFAs could earn 4% initial plus 1% annual renewal commission for selling that fund, which was double the normal trail commission on UTs (and compares with just 0% initial and 0 - 0.25% trail for selling a tracker fund).

Irrelevant as most were sold on a platform so the adviser didnt get that.

feesarefare

dunstonh wrote: »

It is quite clear from my posts that I have said the advisers were wrong but also the provider was wrong as well.

Joyful, to balance Dunstonh's view you may find this article useful
http://www.moneymarketing.co.uk/story.aspx?storycode=1008153&PageNo=2&SortOrder=dateadded&PageSize=10#comments

Please provide evidence to back up your made up stat.

Dunstonh can you please provide details on where you found the information on which type of advisers recommended the Cru funds. Ive been through tons of information in an effort to help some investors but havent seen that anywhere.

Irrelevant as most were sold on a platform so the adviser didnt get that

Again where can I source your info

Thanks

Rollinghome

dunstonh wrote: »

You really are pathetic.

Easy now. You spend every day of your life on this board abusing anyone who dares to disagree with you. As a former salesman yourself your behaviour isn't surprising but it doesn't help more genuine IFAs who want to see the industry cleaned up and who support measures to be introduced by the FSA by 2013 under the RDR banning commission and requiring proper qualications. The sooner it comes the better.

You are a good example of the sort of old-school 'never-give-a-sucker-an-even-break' IFA to avoid that got the industry into the present untrusted state it is. Heaven help anyone who tried to complain to you.

But abuse from your sort doesn't get anywhere with me my friend.