FSA announces redress scheme for Arch cru investors

SnowMan

The Financial Services Authority (FSA) has announced today that firms who advised on investments in the CF Arch cru Investment and Diversified Funds must contact all their clients asking if they want their case reviewed to determine whether they were mis-sold the funds and may be eligible for redress.

See the FSA website here.

Aegis

Pretty good news overall, I suppose. The firms that sold this in a widespread manner (which I believe are in a significant minority) almost certainly didn't understand what they were recommending, which is a real problem for investment specialists. The factsheets available at the time were pretty clear that the investments were predominantly into private equity and private finance assets, which do not fit into the usual asset allocation model for a very good reason!

I am still torn a little on this issue though, as I believe that Capita royally messed up in their role as Authorised Corporate Director, which should have required them to oversee the investment process and the management of conflicts of interest, which they completely failed to do. As such, I believe they should be responsible for more of the losses, though certainly not to the point where the advisers who pushed it onto all of their clients get off completely free.

So much blame to apportion on this one, and unfortunately it's ultimately the consumers who suffer.

dunstonh

The firms that sold this in a widespread manner (which I believe are in a significant minority)

Only about 1000 recommended. Ironically, most were chartered financial planners.

I am still torn a little on this issue though, as I believe that Capita royally messed up in their role as Authorised Corporate Director, which should have required them to oversee the investment process and the management of conflicts of interest, which they completely failed to do. As such, I believe they should be responsible for more of the losses, though certainly not to the point where the advisers who pushed it onto all of their clients get off completely free.

I sort of agree but then it is the role of the adviser to do the due diligence. We knew that Arch Cru was not what it said it was. Many companies had research material issuing warnings or saying it should not be recommended. So, there isnt much of an excuse for those that did recommend it. The buck stops with the adviser ultimately. Although the regulator should ensure that where there is misinformation from a provider, ACD or other that they take that into account.