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Advisers hit out at FSA as Capita let off £4m fine
by Jun Merrett on Nov 26, 2012 at 14:45
Advisers have hit out at the Financial Services Authority’s (FSA) decision not to impose a £4 million fine on Capita Financial Managers for its failings as authorised corporate director (ACD) for the funds.
The FSA has publicly censured Capita for a host of Arch Cru failings, but decided against the fine due to the costs Capita had already incurred related to Arch Cru. It added a fine would have forced Capita FM’s parent to bail out the business.
Advisers with clients in the Arch Cru funds, who are facing payouts to investors as part of the FSA proposed £110 million Arch Cru redress scheme, have reacted with anger to the move.
Felixstowe-based adviser Paul Schwer, who has around £700,000 from 35 clients invested in the funds, said the FSA was operating double standards.
‘Whether Capita could or could not afford the fine should be secondary to the FSA enforcing their rules and publicly naming and shaming wrongdoers,’ he said. ‘It seems like certain institutions are too big to fail. The IFA community are staggered to pay two or three times more compensation than Capita when every aspect of the Arch Cru funds were Capita’s responsibility to administer.’
‘It is the FSA’s responsibility to enforce regulation with the larger institutions but it has failed to do so.’
Jim Clancy (pictured), partner of Northumberland-based Access Wealth Management, who has taken on a client with Arch Cru assets from another adviser, said the decision was ‘totally unfair’.
‘It doesn’t seem like there is a level playing field to let Capita off the fine because of financial difficulties when there are advisers out there who won’t be able to pay the consumer redress scheme.
‘One of the lessons the FSA should learn is to ensure that instead of looking at our capital adequacy, [they should] ensure companies like Capita should have enough to meet their liabilities. Capita is a very big corporate group and it is getting away very, very lightly.’
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