Cru Crisis: the reasons behind FundsNetwork suspension

Cru has claimed that its refusal to allow its largest funds onto FundsNetwork lay behind the platform's decision to take the Arch Cru funds it carried off the platform.

FundsNetwork soft-closed the Arch Cru Income, Balanced and Global Growth funds on 5 March. Capita, authorised corporate director for Arch Cru fund range, suspended the range to all investors on 13 March.

Cru director Lezanne Jones said in an email dated 5 March and seen by Citywire she feared the re-registration of existing holdings in the three funds onto platforms.

‘Since allowing this would present a commercial threat to Arch Cru revenues not compensated by inflows, we declined to offer this re-registration facility at present,’ said then-Cru director Lezanne Jones in an internal email dated 5 March and seen by Citywire.

‘This clearly made the Arch Cru funds less attractive commercially to Fidelity FundsNetwork,’ she added.

FundsNetwork refused to comment other than to reiterate its claim that it decided to remove the funds from the platform for 'commercial reasons'.

But market sources have cast doubt on the role of the re-registration issue in FundsNetwork's decision, suggesting it had got cold feet about the funds after only placing them on the platform on 1 December.

The email shows that since being placed on FundsNetwork on 1 December last year, the three Arch Cru funds attracted just over £700,000 of investments. Capita, the authorised corporate director for the fund range, suspended the whole fund range to all investors on 13 March.

Minutes from a sales meeting held on 8 January also highlight some of the difficulties Cru was facing with the Arch Cru fund range.

They mention managing director Marc Ainscough’s concern at December redemption levels which he said had levelled but still needed to be monitored closely.