FOS rules against adviser who recommended Cru fund as low risk

Was this holding all the monies that the client had invested or was it part of a diverse portfolio.

I cannot believe that there are still advisers out there using a risk scale 1-10 and putting clients monies all in one fund if they are they dserve to get complaints.

At least use fund of funds or proper porfolio planning and asset allocation.

.....of the indefensible? On the face of it I can't disagree with the award, however I would need to interview all concerned in order to pass judgement but as there is no right to an independent appeal this would be a waste of effort.

No problem ..... do what the banks do, ignore the fos and just say you dont agree with them..............simple

How could any self respecting adviser recommend a fund that invests in assets that would normally be the domain of VCTs and tell a client it is "low risk"?

No wonder our industry lurches from one mis-selling episode to the next. Roll on RDR, that's all i can say!

Barry

Self respecting adviser,is that like a life planner?

Anyway VCT is that not a "very cautious trust"

or is that just the ima for you

Whats the point of the IMA?

Having practiced in the industry for over 15 years and having done more 'due diligence on the Arch cru funds that any other fund, to the point where I went to Cardiff to meet the Cru board and several meetings with the CEO Jon Maguire and following him, his puppet, Stuart Anderson. I soon realised that they were only pedling the fund. I then had independent meetings with Archs CIO Michael Derks and several directors on a monthly basis. I spent hours on the fund before recommending it and thought I knew far more about the funds and cells than I ever did about Neil Woodfords fund and where he is/ isnt investing on a daily basis!

All the promotional material, alledgedly compliance/FSA approved showed standard deviations so low that they more than complemented the funds location in Cautious managed sector. Compliance approved! why would an IFA not believe it - unless compliance isnt standard?

The point I am making here is that, for all the salaried compliance managers and FSA types no one, apparently not even the distributor Cru, actually knew what Arch were doing - comments on reregistration of cells assets between cells, currency risk and trading within the funds etc etc. How the hell is a lowly IFA supposed to see through all that with the limited resources he or she has?

Who allowed this fund in the Cautious Manged Sector? Who allowed the promotion of the fund to reside there and push low Standard Deviations high performance?

What a surprsise that the FOS has dound against the IFA the easiest target to go for!

I actually believe if the FSA had kept out of this and the fund had been allowed to trade through this the assets would now be in a beneficial position but just like the With Profit debarcle they force asset managers to pull support at the worst possible time.

This industry is full of chancers and bullshitters, and thats just the journos! To be quiet frank Im sick of it!

Barry, I am a self respecting IFA and I am now checking how many of my clients have property in their portfolios.

It seems to me that in order to get a ruling in favour of a client from the FOS you just need to have lost money. The rest can be adjusted retropectively to suit the case, and seeing as there are a number of property funds out there that have lost similar amounts and have had suspensions (albeit now lifted) we should all be very worried.

Cautious dosent mean cautious according to the IMA ( I now wonder what the purpose of the IMA actually is)

Remember, there is no one looking after our interests. Especially fellow IFA's who are just loving their 'told you so' moment.

And Can I ask why you think RDR will make any difference. Will fund managers suddenly become honest and transparent. Will clients suddenly say, oh yeah, you did mention that. I think not. Every one is happy until the s--t hits the fan and then its every man for himself. As always

The old adage seems appropriate here

If it seems too good to be true it probably is.

unfortunately it proved the case with the Arch Cru Funds.

There was an explanation for their seemingly stelar performance afterall.unfortunately not the explanation expected.i feel for the advisers caught in this mess but would be amazed if anyone recommended clients throw everything into one fund.

This really shocks me. I am the victim of a similar misselling and the FOS rejected my complaint totally, because the firm’s aggressive lawyers put pressure on them and possibly pulled strings of various kinds.

The “case-by-case basis” referred to by the FOS spokesman really means that the FOS will do the diametrical opposite in another similar case if there are vested interests involved. So if the advisor is a cousin of the ombudsman, your complaint will be rejected in the usual way. The usual way is to ignore or spin around anything that gets in the way of the decision they want.

Interestingly, if you shoplift a CD worth five quid, it is a criminal offence, but if an ombudsman does you out of 30 grand, it’s your tough luck. You can take the advisor or the firm (or the FOS!) to court and watch how they manipulate the civil system and run up costs worth more than the damages …

I sigh at the prospect of our industry facing up to another scandal and the public distrust that accompanies them. Another case of an easy-to-sell, well marketed product flogged through people who should know better (not for me the cries of how are we meant to know, what about FSA, internal compliance,. NATO etc etc).

I do have to crack a wry smile at all those IFAs who felt their use of the Arch range of funds positioned them (and their clients) at the top-end of our field. I met several advisers who could not help but tell me how clever and unique their investment selection was and that our approach of asset allocation and along with a core passive strategy was "boring and simply not for their UberUltraHighHigherand HigherStillNetWorth clients".

One day I wish that we will see an end to this fad-investing but I've said that at least half-a-dozen times this decade! This isn't some IFA saying I told you so - it is someone telling you they recognise their academic limits and prefer to keep it simple for themselves and their clients.

people just love sticking the boot in.

A tiny amount of complaints from IFA advice, tiny compensation payouts but still some feel as if they should get their knives out.

I didnt recommend any of this product, only because I see small funds as an additional danger so I didnt even look deeper in to the fund.

If everyone held my view then no new fund would ever get off the ground, so we would only have the basic original fund ranges from the year dot, hardly progress.

I dont think of cautious as being low risk, risk varies greatly in each sector as the majority of us understand, however this appears to be high risk reading between the lines of the usual clever after the event post mortems?

Now even I do not think something that is high risk should be in a cautious sector, it isnt just IFAs who see this, orphan clients with existing funds may look these up themselves and draw their own conclusions from what they see in the Financial Times or somewhere similar.

There are obvious limitations to the level of research any adviser can do, self regulated firms with no support have an obvious resource limit which everyone should realise, it seems that the retailer is always going to be picked upon in this industry and this is clearly not correct.

The manufacturer of a product has responsibilities and the regulator has responsibilties regarding the regulated paperwork that a manufacturer produces, ie Key Facts.

Everything cannot start and finish with the adviser.

If the FSA does not conduct risk assesments on new generic products how can it authorise product for consumer use and how does it know that regulatory documents are a true reflection of risk? Ie risks in the Key Facts?

The same is true with structured products, due to the superb support I get (and pay for) all aspects were covered in my suitabilitiy reports for the very limited structured products I sold, however the FSAs review is way to far behind the launch of these products and as usual after the event. No adviser firm can afford to throw the same budget on research of one product as the FSA hurls at a post mortem, so the FSAs post mortems 'should' always have more detail simply down to time and budget.

It is about time the FSA did something before the event , risk assesments of products without liability.

Someone above points to limits of academic abiltiy, I do not agree with that at all, I would say stop and think, this highlights exactly the limits in the academic study material that is held up as good training material.

Investment Principles covers none of this, it is a shame that a new system for CPD and basic knowledge is not set up with loads of CFs totalling a minimum points with limited life which could be the minimum standard, with small 10 or 5 point CFs covering all aspects of the real business and some of these covering the construction, workings and risks of types of OEICS, ie absolute return funds, cash funds and so on, plus how they may intergrate in a portfolio and where they may clash with other funds.

This case shows the limitations of research available to many advisers, the lack of regulation or vetting of authorised funds, the lack of auditing regulated documents such as key facts to see if they match the product offered by the provider, the shortfalls of IMA sector listings and how ALL current academic qualifications miss these subjects altogether, the sort of information that should be near top of the list of knowledge amongst advisers.

This shows that the industry is far out of touch from reality that all it can do is point the finger at the weakest least likely part of the industry to bite back when things go wrong, very poor in my opinion.

Have you seen an Arch Cru brochure. Glossy thing with attractive young ladies pouring wine in the sunshine.

Who will pay for the messes in this industry....we will of course.

Look at cautious managed sector. Full of funds swinging between equities and bonds. Letters in the post every 2 minutes of managers changing their mandate and using ucits 3 to meddle in derivatives and any other instrument that helps them keep their performance up. No wonder IFA's struggle to keep up. About time the IMA got a grip!

Absolutely spot on!

Good luck to you, and don't let the b******s get you down!

The Financial Ombudsman Service has made a decision on asset allocation and judged that the IMA Cautious Managed Category was of no value in assessing the risk of the fund. It seems that the only important measure of asset allocation is the allocation tool used by the Financial Ombudsman Service. I've searched the Ombudsmans Website and cannot find it. Could the Ombudsman please indicate which criteria they use in assessing the risk profile of a fund? Until they produce their risk assessment criteria we are all working in the dark.

The FOS do NOT have standard profiles for assessing risk levels. They operate in this manner so that they can swing complaints any way they want. That is, they do not want to commit themleves, so that they can do as they please.

- No idea what asset allocation is.

The adjudicators have no training nor any reference books on asset allocation or portfolio building at all.

Risk is what they talk about - but I am unsure they understand risk either.