Arch to manage Cru fund 'cells' despite FSA restrictions

Arch Financial Products will be able to continue managing the Channel Islands-listed cell companies that make up the Arch Cru fund range despite the Financial Services Authority’s (FSA) withdrawal of its permission to run funds.

The FSA restriction, imposed in the wake of the suspension of the Arch Cru fund range, will prevent Arch from managing the suspended funds at OEIC level but not at cell level, according to Cru managing director Marc Ainscough.

Statements on the FSA register show the regulator has imposed tight restrictions on Arch’s ability to operate as a fund manager.

Under ‘permission to undertake regulated activities’, the FSA said Arch ‘will not, without the FSA’s prior written approval, perform the regulated activities of advising on investments, arranging deals in investments, dealing in investments as agent, making arrangements with a view to transactions in investments and managing investments’.

Under a separate heading of ‘CIS’ [collective investment scheme], the FSA said Arch ‘will not, without the FSA’s prior written approval, establish, operate or wind-up any collective investment scheme’.

Felixstowe adviser Paul Schwer, who has around £700,000 from 35 clients invested in the funds, said the FSA’s move had focused his concerns on Arch.

‘When the problems first came to light, my concerns were there were faults on the marketing side, that Cru had been too gung-ho,’ he said. ‘My concern does lie more with where Arch is.’

Arch said the restrictions would not affect its handling of the suspension process. ‘Arch will continue to manage their existing investment portfolios during the suspension of their UK fund.’

It said it had requested the FSA take this action so it could focus on resolving the suspension of its UK fund range, but Schwer said he was sceptical.

Tony Granger of Mentor Professional in Shrewsbury was pleased the FSA was taking a more active approach. ‘I’m pleased the FSA is doing this. It’s at last showing some direction,’ he said.